China Telecom launches in UK

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First Chinese international MVNO rides on Everything Everywhere's network, could expand around Europe

By CAROLINE GABRIEL

Published: 5 January, 2012

READ MORE: UK | China Telecom | MVNO

China Telecom's European arm is to launch an MVNO service in the UK, running on Everything Everywhere's network and targeting Chinese businesses and expats in the country as well as students and visitors.

This is the first mobile service launched outside China by one of the country's three cellcos, and the carrier is widely expected to expand the offering to other European nations. Yan Ou, managing director of China Telecom (Europe), told TelecomsEurope last summer, when the plan was first mooted: "If [the UK operation is] successful, we will look to other markets such as Germany or France."

In his statement this week, he said: "We are keen to launch the service in the UK as soon as possible as there is a real gap in the market for the provision of tailored mobile services and competitive tariffs aimed at the growing Chinese population in the UK." The country has a population of about 500,000 people of Chinese origin.

China Telecom's deal with EE was brokered by mobile virtual network aggregator Transatel, which identifies partners for various carriers, promising to fast track the establishment of virtual operators. EE now has 24 MVNO customers.

So-called ethnic MVNOs have proved a lucrative element of the virtual mobile services market in recent years. There are several US firms targeting the Latin communities, while operators like Lebara target Afro-Caribbean customers in Europe, and some are even more specific, like Turkcell Europe, which appeals to Germany's Turkish population.

MVNO analyst John Strand of Strand Consult said in a recent interview: "There is no doubt about it, across the world there are three successful MVNOs: supermarkets, ethnic and web-based, no frill solutions. All other MVNOs have challenges." And the ethnic model can be a means for operators like Japan's NTT DoCoMo to get a foothold in another territory.

China Telecom will transfer some of its content and mobile internet services from its own 3G launch to its MVNOs, but handset strategy will not be emulated. Like many new MVNOs, China Telecom will pursue a SIM-only strategy to reduce subsidy, marketing and support costs. "In the UK, we will provide SIM cards. We don't intend to launch handsets," Ou said.

Although China Telecom EMEA flies below most radars, it did grow its revenues by 70% in 2010 and is targeting a further 40% increase this year. Other expansion options include a brand awareness campaign for the enterprise sector, which could even include acquiring a known telecoms or services brand. And the EMEA unit will expand its geographical reach too, planning to set up offices in Turkey and Nairobi and convert the Russian base into a full subsidiary.