Telecom operators betting on India over China

As the market for voice calls matures, telecom operators from around the world, from Vodafone to Telefonica, are offering more lucrative services that let users download songs and TV programmes, for example.

These value-added services have taken off in Japan and South Korea, and the mobile phone operators and companies that provide the songs, ringtones and television are looking to muscle in on China and India, the world’s biggest and fastest-growing markets.

But, although both countries present obstacles to foreign investment, India is the faster growing market with an easier business climate for telecom companies. “For telecom operators, you should go to India because it is the fastest growing market,” said Liu Bin, an analyst for BDA.

The Indian market is also crowded with more carriers and content providers, offering greater tie-up opportunities. China’s estimated $10-billion mobile content market - controlled by state duopoly China Mobile Ltd and China Unicom Ltd - is 10 times the size of India’s and increasing by around a third each year.

But the problem with China is how to get your foot in the door. Beijing closely guards its sensitive telecom sector, allowing just a few foreign investors, such as Vodafone and SK Telecom. Foreign telecom operators have been lobbying China for years seeking access to the market. Some still hold out hope for liberalisation, if only in select fields.

China allows foreign carriers to offer value-added services, such as data storage and call forwarding. But they aren’t allowed a controlling stake in any joint ventures and companies need to pay $250 million for a basic services licence.

“It’s a good opportunity. But the problem is there are just so many people that want to get into this business. You have to have some special and interesting products,” said Bill Crampton, president of Boston Training Technologies, which provides business training content in English to China Mobile.