Sharp Downturn Reported in Telecom Sector's Investment

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Last updated at: (Beijing Time) Wednesday, July 17, 2002

Sharp Downturn Reported in Telecom Sector's Investment

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At the beginning of July Ministry of Information Industry announced the telecom sector's overall development from January to May, of which telecom operators' sharp downturn of investment in infrastructure and equipment deserves great attention.

The decrease of investment attributes to the following four reasons:

First, the world telecom industry is dull and so all operators around the world are cautious and reasonable in investment. In such case, domestic operators have to take the prevailing tendency into consideration.

Secondly, the telecom industry's split and restructure has exerted an effect on it. The new telecom didn't start operations until last May though the State Council announced the split and restructure scheme as early as last December. Many investment plans have been put back during that period.

Thirdly, operators have launched more mature marketing operations due to the split and restructure.

Fourthly, an advanced network covering the whole country has been established thanks to the several years' development. Under such circumstances, large amount of investment would result in waste.

Negative effects or mature performance?

What effects the falling investment would bring to China's telecom sector? There will be two negative effects: the telecom sector's sustainable development would be slow down and the development in rural and remote areas would make a slow progress.

However, experts consider the decreasing investment as a mature performance in China's telecom market.

Also, it's a change of operating concept. Currently the telecom market has experienced three great changes: from huge profits to a few, from disorderly to orderly operation and from price competition to service competition.

Moreover, it can not only avoid the unnecessary repetition in network building but also make an effective use of idle resources.

Sources revealed that the revenue the telecom sector reaped from January to May saw an increase of 16.1 percent over the same period of last year. The number of phone users throughout the country has hit 370 million, of which fixed phone users are 196 million and mobile phone users, 170 million.

By PD Online Staff Yang Ruoqian

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