China's three main telecommunications operators - China Mobile, China Unicom, and China Telecom - are to play a growing role in the digital world in 2023 and will see more cloud and infrastructure to come, reported communication media platform Light Reading.
Liu Liehong, chairman of China Unicom, told investors recently, "You can no longer look at the telecom industry with old eyes. The telecom industry is on the new track of the digital economy." The operator bosses are now selling a new vision of their companies.
The three big telcos are being maneuvered into position as the infrastructure pillars of China's digital economy, which is at the heart of the national growth plans. The digital economy accounted for just under 40% of China's GDP in 2021 and is forecast to top 50% by 2025, according to China's Ministry of Industry and Information Technology (MIIT).
The biggest manifestation of this shift to date has been the stellar growth in the operators' cloud businesses, up more than 100% in the first three quarters of 2022.
In the total cloud services market, Alibaba still has the biggest share, but China Telecom ties with Huawei for second place. In the managed cloud services market, which was worth RMB12.1 billion ($1.8 billion) - up 28% - in the first half of last year, the telcos took three of the top five places, according to IDC.
Last year, China Telecom was also designated as the first official national cloud provider in a joint venture with three other state-owned companies, making it the preferred provider for government projects. At a more fundamental level, Chinese economic planners have determined that data is now a factor of production, like land and labor, and as a strategic asset is far too important to be left in the hands of the private sector, Light Reading noted.
So the operators are being pressed into service to build out the national "computing power network," which also intersects with another priority project, the 'east-west' scheme. This is a plan to build a chain of big data centers in western China, taking advantage of the lower land costs and cleaner energy, and link them up with big fiber pipes to the economic centers on the eastern seaboard.
The operators have not revealed just how much the burden of being default digital infrastructure providers is costing them, but it is unlikely to be a significant increment over their existing capital expenditures budget.
In addition, the three Chinese players are rare among contemporary telcos in enjoying a positive ride in the stock market. On the Shanghai exchange last Friday, China Telecom spiked 10% - the daily limit - China Unicom rose just under 7% and China Mobile nearly 5%. Since January 1 on the Hong Kong Exchange, meanwhile, China Telecom has jumped 16.9%, China Unicom 8.4% and China Mobile 6.5%, according to Light Reading.
(Chen HX)
