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Friday, April 01, 2005

China Telecom and its business strategy

We all know that the Internet in China is growing. Let's talk about one beneficiary of the growth, China Telecom.

"China Telecom, the Hong Kong-listed unit of the country's biggest fixed-line operator, said net profit doubled in 2004 thanks to the growth in its broadband Internet business, which is likely to remain an earnings driver as it cuts back investment in mobile services."

In their conference about the business growth They believe that broadband will remain the main business driver, and I agree. Broadband usage across the region and especially China is still small.

What I don't agree with is the suddent decision to move away from a core strategy, just because leaders get worried about future growth.

"They are saying that "given the maturing of the fixed-line market," the company plans to switch its strategy to an "integrated information services provider'' and has also recently discussed plans to offer pay-TV services.

First of all, everybody talks about integrated services nowadays, just like companies did talk about provision of solutions a couple of years back - and still talk about it. This is not necessarily a differentiator - it only is if you are good at it, and it takes some time to get great at it.

Secondly, I am not sure if pay-TV really is the way to go. They say that they want to enhance customer satisfaction by network quality enhancement, instead of geographic expansion. That is fine.

But may be they should also take a look to where the Internet is developing - since they are doing so well here already. Why not enhancing the user experience in the Internet space first before diversifying into Pay-TV?

(By Asia Business Consulting)