EXCLUSIVE: China’s high-profile industry restructuring will not reduce the dominance of China Mobile and will see new mobile operator China Telecom struggle to achieve its ambitious subscriber targets, according to the latest forecasts from Wireless Intelligence. In May, China’s government announced plans to meld its six main state-owned companies into three operators; China Mobile, China Telecom and China Unicom. Initial reports suggested the plan aimed to provide a more competitive market by removing China Mobile’s dominance and merging fixed and mobile operations between firms to enhance service offerings. In addition, recent reports state China is likely to use a network-sharing policy to enforce so-called ‘asymmetric regulation’ designed to allow China Unicom and China Telecom to compete more effectively with China Mobile. However, Wireless Intelligence forecasts that China Mobile’s current share of market connections (72 percent as of Q3 2008) will increase over the next two years, with a projected market share of approximately 75 percent by Q4 2010. Second-generation GSM technology will account for most of its connection base (98.5 percent), with local 3G standard TD-SCDMA forecast to have around 9 million connections by the end of 2010.

Meanwhile, Wireless Intelligence forecasts that China Unicom’s market share will fall from a current level of 28 percent to 20 percent by the end of 2010, mainly due to the sale of its CDMA business to China Telecom. By then, 3G WCDMA/HSPA connections will make up 2.5 percent of its projected total customer base. Rival China Telecom – which is expected to receive a 3G license based on CDMA2000 1xEV-DO technology – has previously stated its intent to more than double the number of subscribers on its network to around 100 million by 2010. However, Wireless Intelligence forecasts the operator will have only approximately 40 million connections at the end of 2010 (after a recent clean up of its newly-acquired subscriber base reduced its current base from 41 million to 29 million), controlling just under 5 percent of China’s total mobile market by the end of that year. In terms of milestones, the country is expected to surpass 1 billion total mobile connections by the second quarter of 2012. Wireless Intelligence’s forecasts come as China preps the long-awaited award of commercial 3G licenses. Reuters today reports that the country’s three operators will spend about US$41 billion on 3G networks over the next two years.