China Mobile’s Expansion
Recently China Mobile decided to reveal its plan to invest $10,250,000,000 during the next three years to build, upgrade and continue to expand its wireless network in the rural areas in China.
China Mobile has spent $3,000,000,000 since 2004, to extend its network coverage into the remotest villages of China.
Bases on the number of subscriptions, China Mobile is the largest mobile service provider in the world and the company has signed a pact with the nation’s Ministry of Agriculture to include over 10,000 villages yearly under its network coverage, which will allow the people who live in these villages to access China Mobile’s wireless services by the year 2012. This means there will be 98 percent coverage of China’s rural regions by the end of the three year term.
In addition, the company will also promote its 3G service that is based on technology and was specifically developed for these covered areas.
China Mobile’s leadership position in the worldwide wireless marketplace is supported by relatively low wireless penetration of only 46 percent at the end of the year in 2008 in China, increased purchasing power of the customers, and a Chinese economy that is continually healthy. But, the saturation of the lucrative urban marketplaces in the eastern part of the nation has resulted in a shift of China Mobile’s focus marketplace in rural areas which are considered to be less affluent marketplace areas in China with less than 20 percent of the penetration of wireless service.
In 2008, the company commanded 88 percent share of the new consumer additions, over half were received from rural marketplace regions. One of the higher priorities of the company is to expand into rural marketplaces because China Mobile faces more intense competition as a result of the distribution of the 3G licenses by the government and the recent overhaul of the Chinese telecom industry.
China Mobile’s peers, China Telecom (CHA) and China Unicom (CHU) are aggressively trying to pursue the countrywide deployment of their respective 3G services currently. As a result, the company is using the strategy of rural expansion to defend against competitors taking over their subscriber base.
Combined with the 3G service deployments through the year 2009, experts believe that the expansion into the lowly penetrated rural areas in China will be very successful. The value added, customized mobile services should establish China Mobile as the dominant mobile carrier and place them well ahead of their closest competitors. Therefore, the experts agree on a purchase China Mobile recommendation.
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