Telecom Markets of China, Pakistan and India – Part 1

June 22, 2007 9:13 am 0 comments

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Babar Bhatti

In this story I’ll review and compare the emerging telecom markets of China, India and Pakistan. Combined together these 3 neighboring countries present one of the fastest growing region for the telecom industry, making them especially attractive for investors and companies. Although the business, technical and political environments of China, India and Pakistan vary significantly, there are many common characteristics as well. Naturally the telecom and service companies are on the look for winning ideas, products and services which can be taken from one country and applied to the other. In general, China is the undisputed leader in manufacturing and India has the edge on services. Pakistan enjoys a better regulatory environment for telecom, with fewer complications such as spectrum shortage and competing standards, as in India.

The deals and cooperation among the telecom sector of 3 countries is growing rapidly as can be seen from the frequent announcements in the media. CMPak is a prime example (and one of the most interesting to watch) which has announced investments of over 1 billion US$ in Pakistan. In Research and education, for instance, Huawei provides equipment and training to University of Eng. & Tech., Lahore. Equipment, R&D and service deals between China and India are on the scale of multi-billion dollars. All of this has a political angle as well which surfaces at times  – but this aspect is beyond the scope of this post.

In this part I’ll present market characteristics, projections and the growth areas in China, Pakistan and India.  In Part 2 of this series I will discuss about the electronics and manufacturing subsectors of the industry. You may also want to see some of my past posts related to this:

Key Points:

1- The numbers: industry analysts estimate that by 2010 the mobile subscribers will be: 

  * China: from 487 to 900 million
  * India: from 160 to 400-500 million
  * Pakistan: from 58 to 100+ million

2- Rural markets are the focus as urban areas get saturated with phne service. Outside China’s major cities, less than 30% of the population has mobile phones, and in India, where 72% of the people live in rural villages that mainly lack a mobile network, less than 15% of the population owns a mobile phone. The recent introduction of cheaper phones in India by Nokia, Vodafone etc is an example.

3- ARPU fall is higher in China spurring companies to provide value added services. Same trends will follow in India (where VAS will be 17% of market by 2010) and Pakistan – see the article belwo for more.

4- China will remain a testbed for newer technologies such as 3G, mobile advertising etc. Innovative products will be adopted quickly, regardless of the source. China’s fixed broadband access and IPTV market will add to growth.

The emerging markets of China and India get fair amount of media coverage. Sometimes a comparison is also made. Here’s one recent article titled ”Ericsson Aims Deeper Inside India, China” by Wall Street Journal. WSJ reports about how Sweden’s Ericsson is targeting more business in India and China and the challenges it faces. Recently Ericsson signed a $1 billion deal to supply GSM network equipment in China. Here’s a few points from the WSJ article:

In India, Ericsson — the world’s largest wireless-equipment maker by sales — looks set to pick up the majority of an estimated $4.5 billion contract with India’s third-largest mobile-phone company, Bharat Sanchar Nigam Ltd.

In the Pune, Maharashtra, region of India, Ericsson is working with mobile operator Idea Cellular Ltd. and the GSM Association, an industry body, to develop biofuels using local nonedible crops. By reducing the dependence on more expensive diesel power, Ericsson hopes to lower the cost of rolling out mobile-phone infrastructure to rural areas. Cleaner fuel will also reduce engineer site visits and prolong the life expectancy of generators, the company says.

In China, Ericsson faces two potential threats. While the majority of China’s mobile phones currently operate on GSM networks, the government and China Mobile are currently testing a homegrown version of third-generation, or 3G, technology known as TD-SCDMA, which differs from the common standard being adopted across Europe and North America. Ericsson only has an approximate 1.4% share of the total TD-SCDMA contract. ZTE Corp. and Huawei are among the local vendors that picked up a large part of the deal. Nomura says that there is a significant risk that TD-SCDMA can become the dominant technology in China, and if this happens, Ericsson won’t have the cost advantages it has in other mobile technologies.

Stay tuned for Part 2 of this series in which the electronics and manufacturing will be discussed.

Originally published by Babar Bhatti at

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