China Unicom Ltd. (CHU)
News and Research on China Unicom Ltd. (CHU)
Business Description
China Unicom Limited, an investment holding company, provides GSM and CDMA cellular, long distance, data and Internet services in the Peoples Republic of China (PRC).
The company had a total of 105.87 million GSM cellular subscribers as of December 31, 2006. It had approximately 36.49 million CDMA cellular subscribers as of December 31, 2006. The company also provides long distance, data and Internet services in China. It had 1.254 million broadband Internet access subscribers as of December 31, 2006.
Segments
The company has four segments based on the various types of telecommunications services mainly provided to customers in Mainland China. The major business segments operated by the company are classified as: GSM Business — the provision of GSM telephone and related services; CDMA Business — the provision of CDMA telephone and related services, through a leasing arrangement for CDMA network from Unicom New Horizon; Data and Internet Business — the provision of domestic and international data, Internet and other related services; and Long Distance Business — the provision of domestic and international long distance and other related services.
Cellular Services
The company offers both GSM and CDMA cellular services. It also offers GSM international roaming services in conjunction with 260 operators in 170 countries and regions and CDMA international roaming services in conjunction with 22 operators in 16 countries and regions.
The company offers GSM and CDMA dual mode cellular handset service under the brand name ‘Worldwind.’ In April 2005, it launched ‘Worldwind’ dual-mode card service based on the dual mode handset service. In 2006, the company introduced the ‘dual-standby’ technology into its ‘Worldwind’ services and offers ‘dual-mode, dual-standby’ services under the brand name ‘Worldwind.’
The company, in October 2005, launched its CDMA network in Macau to provide roaming services for all CDMA users in Macau. In 2006, the company obtained approval from the Macau government to provide CDMA services to local users in Macau and also received a 3G license to operate a CDMA 2000 network in Macau.
The company also offers a range of value-added services, or VAS, to its cellular subscribers, including short message services, or SMS, personalized ring-back tone services, CDMA 1X wireless data services and GSM wireless data services, under the integrated business brand of ‘uni’, which represents various wireless VAS it offers for its cellular subscribers.
GSM Cellular Services
The company’s GSM cellular networks reach all cities, county centers, major towns, major highways and railways in its cellular service areas. It selectively deploys GSM systems that operate in the 1800 MHz frequency band in high-density population and high call volume centers to supplement its GSM networks operating in the 900 MHz frequency band. The company has upgraded its GSM networks in 65 major cities to be able to offer GPRS services. As of May 17, 2007, the company launched the commercial operation of GPRS services in 70 cities on a trial basis.
Post-paid Services and Pre-paid Services
The company offers two main categories of GSM cellular services: post-paid and pre-paid services that target different consumer segments. It promotes pre-paid services to migrant population and temporary residents as well as mass market subscribers and targets post-paid services at consumers who have relatively high usage of telecommunications services.
Subscriber Increase: As of December 31, 2006, the company’s total number of GSM subscribers included 105.87 million, including 54.27 million post-paid subscribers and 51.61 million pre-paid subscribers.
MOU and ARPU: MOU and ARPU of the company’s GSM services were 286.05 billion minutes and RMB49.2, respectively, in 2006. The average MOU per subscriber per month was 237.2 minutes in 2006.
CDMA Cellular Services
The company’s controlling shareholder, Unicom Group, has the license to offer CDMA cellular services in China. It has constructed a CDMA network with comprehensive nationwide coverage through its wholly-owned subsidiary, Unicom New Horizon Mobile Telecommunications Company Limited, or Unicom New Horizon. The company has leased CDMA network capacity from Unicom Group and offer CDMA cellular services and CDMA 1X wireless data services. As of December 31, 2006, Unicom Group’s total CDMA network capacity amounted to approximately 84 million subscribers.
Services
The CDMA services that the company offers include basic voice and value-added services such as call forwarding and voicemail, caller identity display, SMS services and CDMA 1X wireless data services. Like its GSM services, its CDMA services also offer both post-paid and pre-paid services.
In August 2004 and April 2005, the company launched CDMA and GSM dual-mode cellular handset and card services, respectively, under the brand name ‘Worldwind.’ In 2006, it further integrated ‘dual-standby’ technology into its services to launch the ‘dual-mode, dual-standby’ services. ‘Worldwind’ ‘dual-mode, dual-standby’ services, which are available to subscribers who use either a ‘dual-mode, dual-standby’ handset or a ‘dual-mode, dual-standby’ user card, have the following features: users can switch between GSM and CDMA networks in China, thereby offering wireless coverage in areas of the country covered by only one of these networks; when roaming in areas outside of China, users can use the cellular services of local operators, whether they are GSM or CDMA, who signed roaming agreements with the company; and GSM users who sign up for ‘Worldwind’ can continue to use the basic GSM services. As of December 31, 2006, the company’s total CDMA subscriber base reached 36.49 million.
Value-added Services
The company offers a range of value-added cellular services under a uniform business brand of ‘uni’, including SMS, personalized ring-back tone services, wireless internet services and other wireless information services. A total of 75.68 billion short messages were transmitted by the company’s GSM and CDMA subscribers in 2006. Its SMS services mainly include the following: SMS transmission and receipt through handsets, service provider-assisted SMS, business SMS platform, voice SMS and other information services. The SMS platforms of its GSM and CDMA networks are interconnected with each other. The company’s SMS platforms are also interconnected with the SMS platforms of China Mobile’s GSM network, China Telecom’s ‘Little Smart’ network, and China Netcom’s ‘Little Smart’ network.
The company markets personalized ring-back tone service under the brand name ‘Cool Ringtong.’ As of December 31, 2006, it had a total number of 35.88 million subscribers to Cool Ringtong service.
The company offers nationwide GSM wireless data services under the service brand of ‘Uni-Info’. The Uni-Info services are based on a nationwide wireless information services platform and offers a variety of services including games, downloads and other entertainment services, information and notification services, personal information management and transactions services. It has upgraded GSM networks in 65 major cities to be able to offer GPRS services as of December 31, 2006.
The company also offers CDMA 1X wireless value-added services under the uniform business brand of ‘uni’, with individual services offered under various sub-brands, including ‘U-Info’, ‘U-Net’, ‘U-Mail’, ‘U-Magic’, ‘U-Map’ and ‘Uni-Web.’
Long Distance, Data and Internet Services
The company offers international and domestic long distance services in China based on both the PSTN standard and the IP telephony standard. It has developed a nationwide video-conferencing network that reaches various cities. In addition to long distance services, the company also offers data and Internet services throughout China. Its long distance, data and Internet services are supported by advanced, unified nationwide network system.
Public Switched Telephony Services
The company offers PSTN services to business and residential customers who register their telephone numbers with it. They can access the company’s services by dialing a prefix of ‘193.’ It also distributes pre-paid long distance calling cards that purchasers can use to access its services by dialing a prefix of ‘193300.’ For some corporate and government customers, the company also offers public switched long distance services over dedicated lines, frequently as part of integrated offerings of long distance and data services.
IP Telephony Services
The company offers domestic and international long distance IP telephony services through interconnection of IP network with the Internet and other telecommunications networks based on a manageable IP network configuration to enhance service quality.
Data Services
The company provides data services in 328 cities in China. It targets high volume users of integrated voice, data and video communications and offers them data services as part of integrated offerings of long distance, data and Internet services. Its target customer groups are government offices, financial institutions, multinational or multi-regional corporations, large- and medium-sized enterprises in China, and Internet service providers and Internet content providers that provide telecommunications services. As of December 31, 2006, the total leased bandwidth of ATM and FR data services was 7,428 x 2 Mbps.
The company’s data service offerings mainly consist of broadband, managed data services, including: Frame relay, or FR, services, which provide high speed data communications services linking remote business sites using FR technology; Asynchronous transfer mode, or ATM, services, which employ ATM technology and are able to handle high bandwidth, integrated voice, video, data and Internet traffic; and Broadband video-conferencing and video-telephony services, which are provided under the brand name of ‘Uni-Video.’ These services include video-conferencing, video-telephony, video conference room leasing and video public telephony services. These services are based on the company’s existing unified data network platform.
Internet Services
The Internet services that the company offers include:
Dedicated Internet Access: The company offers business customers high speed Internet access through dedicated lines. As of December 31, 2006, the company had a total of 31,350 subscribers for dedicated Internet access. It packages this service with voice and data services to provide integrated communications solutions to business customers and cooperate with cable operators and real estate developers to offer broadband access to residential customers.
IDC Services: The company has built Internet data centers, or IDCs, in selected cities including Shanghai, Beijing, Guangzhou and certain provincial capitals, and provides server hosting, server rental, virtual servers and other IDC services to commercial customers and virtual IDC operators.
‘Ruyi Mailbox’ Services: This service allows the company’s cellular subscribers to use their cellular phone numbers as e-email addresses. As of December 31, 2006, the number of ‘Ruyi Mailbox’ subscribers was approximately 12.22 million.
Other Internet Services: Other Internet services that the company offers include international Internet Protocol-Virtual Private Network (or IP-VPN), Virtual Private Data Network (or VPDN), Virtual Internet Service Provider (or VISP), Uninet international roaming and corporate e-mail services.
Leased Line Services
The company leases transmission lines to large business customers and other telecommunications operators. Its leased line services provide customers with digital links directly connecting customer sites. As of December 31, 2006, the company had a total leased bandwidth of an equivalent of 50,391 x2 Mbps circuits. Leased line tariffs are primarily based on the bandwidths of the lines leased and the distance of transmission.
Roaming
As of December 31, 2006, the company’s cellular subscribers can roam on cellular networks in Europe, North America and other Asian countries and regions through Unicom Group’s international roaming agreements with 260 GSM operators in 170 countries and regions and 22 CDMA operators in 16 countries and regions. Unicom Group has also agreed to arrange for the company to participate in its future international roaming arrangements.
Transmission Network
The company owns and operates an advanced nationwide fiber optic transmission network (except for the Xizang Autonomous Region, in which it leases capacity from other operators). As of December 31, 2006, its fiber optic transmission network reached 346 cities with a total cable length of approximately 863,000 kilometers, of which fiber optic backbone transmission network accounted for approximately 125,000 kilometers.
Strategic Cooperation
The company, as of June 20, 2006, entered into a strategic alliance framework agreement with SK Telecom Co., Ltd., or SKT, a mobile telecommunications service provider in Korea. Pursuant to this agreement, the company and SKT agreed to cooperate on the further development of CDMA cellular communication services in China. It has identified SKT as sole and exclusive partner in relation to CDMA cellular communication business operations for a maximum period of 18 months in the PRC in the areas of CDMA handsets, value-added services and related business platforms, marketing, information technology infrastructure and network technologies.
Competition
Cellular Competition: The company competes with China Mobile. Its cellular services compete with the wireless local communications services of China Telecom and China Netcom known as ‘Little Smart’. The company’s cellular businesses face competition from China Mobile Communications Corporation, or China Mobile, China Telecom Corporation Limited, or China Telecom, and China Network Communications Group Corporation, or China Netcom.
Long Distance Telephony Competition: The company’s competitors include China Telecom and China Netcom. Its IP telephony services face intense competition from China Telecom, China Netcom, China Mobile, China Railcom and China Satcom.
Data and Internet Competition: China Telecom and China Netcom are the company’s major competitors in the data services business in their respective service areas. Other competitors include China Railcom and China Satcom.
History
China Unicom Limited was founded in 2000.
