e麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略VIP

e麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略2024/3/24e麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略ACKNOWLEDGEMENTSANDREFERENCESMGMsandCSSinvolvedintherelevantstudiesincludethefollowing:TonyPerkins(BEI)StefanAlbrecht(BEI)ChipperBoulas(HKO)PeterKenevan(TOK)PerchowJosephChang(SHA)AndrewWu(HKO)HaiWu(BEI)JaneXing(HK)YiFeng(BEI)ShengFLi(SHA)YoshinobuTakanuki(TOK)GraemeHunter(JOH)JuliaYang(BEI)EricXu(BEI)JasonLiu(BEI)ShirleyChen(BEI)TheseriesofPDsincludethefollowing:#ChinaMacroeconomicEnvironment#China’sMobileTelecomServiceIndustryOverview#China’sInternetIndustryOverview#ChinaTelecomEquipmentandServicesOverview#China’sMobileHandsetSectorOverview#ChinaTelecomIndustryRegulatoryOverview#KeySuccessFactorsandCaseStudiesofMNCsEntrytoChinae麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略KEYMESSAGES1.China’smobiletelecomservicemarketishugeandfastgrowing,representingUS$21billionmarketsizein2001andUS$38billionin2005.Thismarketissupportedbytheworld’slargestsubscriberbaseat145million,alreadycomprising15%oftheworld’stotalin2001andgrowingtopotentially218millioninalowcaseor300millioninahighcaseby20052.Thecompetitivelandscapeformobileserviceshasevolvedfromasingleregulatorandoperatortotoday’sduopolyofChinaUnicomandChinaMobile,bothofwhomareunassociatedwiththeMinistryofInformationIndustries.AsecondbreakupofChinaTelecomisexpectedtoformtwolargetelecomoperators,ChinaTelecomandChinaNetcomGroup,whoarelikelytoreceivemobilelicenses.Afifthtelecomoperator,ChinaRailcom,alsohasthepotentialofreceivingathirdgenerationlicenseandbuildingamobilebusiness.Fornow,ChinaMobiledominatesthemarketwith82%valueshareand72%subscribershareandownsmuchofthehighvalueuserbase.Howeverchurnisalreadyhighandisexpectedtoincreasewithcontinuingpricingpressuresandincreasedcompetition.3.WirelessdataservicesareexpectedtogrowquicklyinChinatoamarketofpotentiallyoverUS$4billionby2005,usedby43%ofallmobileusers.Interestfromconsumersurveyshavebeenhighandoperatorsandotherplayersareactivelybuildingservicesinthemarket.WhileearlyWAPserviceshavefailedtocatchon,SMShasgrownexponentiallywithupto20billionSMSmessagesin2001.Theearlyadopterswillbemobileprofessionalsandmodernyouth,whowillrequireservicesanddevicestailoredtotheirneeds.4.Regulatorychangesloom,particularlywiththeaccessionofChinatotheWTO.WhileforeignerswillbeunlikelytosetupMVNOs,WTOwillallowgreaterparticipationofforeignersinbasicandvalueaddedservices,althoughgeographiclimitationswillexistthrough2004andChineseplayerswillberequiredtoownatleast50%oftelecomserviceventures(51%forbasicservices).Regulatoryrisksremain,withnomeanstoappealregulatordecisions,unclearinterpretationofregulationincludingWTOcommitments,andthegovernment’strackrecordofintransparentandunpredictabledecisionmaking.(SeeseparateregulatoryPDfordetails)AppendixPlayersprofiles3Gtechnologystandardschoicese麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略KEYMESSAGES1.China’smobiletelecomservicemarketishugeandfastgrowing,representingUS$21billionmarketsizein2001andUS$38billionin2005.Thismarketissupportedbytheworld’slargestsubscriberbaseat145million,alreadycomprising15%oftheworld’stotalin2001andgrowingtopotentially218millioninalowcaseor300millioninahighcaseby2005e麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略1997-2001MOBILESERVICEREVENUEGROWTHOF30%CAGRHASOUTPACEDOTHERTELECOMSERVICESECTORSANDISPROJECTEDAT16%THROUGH2005Revenues

US$BillionsCAGRvs.otherindustries(1997-2001)PercentMobileFixedlinePagingCAGR30%CAGR16%

Source:DeutscheBank;McKinseyanalysise麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略 * RevenuesdonotequaltheproductofARPUassubscriberfiguresareprovidedforyearend,notaveragesubscribersduringayear.Detailedinformationonthetimingofnewsubscriptionsandchurnrequiredforthecalculationofaveragesubscribersduringagivenyearisnotavailable**AllCAGRsarecalculatedontheannounceddataSource: DeutscheBank;JPMorgan;MIIEXTRAORDINARYSUBSCRIBERGROWTHISTHEPRIMARYDRIVEROFREVENUEEVOLUTION,MORETHANMAKINGUPFORLARGEDECLINESINARPUDUETOSTIFFCOMPETITIONMobilerevenues*

$BillionsNumberofsubscribers–lowcaseMillionsCAGR30%CAGR16%CAGR83%ARPUUS$/monthCAGR-24%CAGR-7%PenetrationinitiallylowGovernmentbackingforincreasingsubscribernumbersRelativelylowfixedlinepenetrationLow-endprepaidsubscriberincreaseDriversDeclineduetoincreasedprepaidandlowerspendingbylateentrantsTariffreductionascompetitionincreasesSlightlyoff-setbyincreaseindatatrafficinlateryearsCAGR19%20823526329117161515AnnouncedEffectivee麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略 *05forecastuselowcase,netsubsafterinactiveandmulti-sim-cardreduction**MajorEuropeancountriesinclude:UK,France,Italy,Germany,Netherlands,Spain,Sweden Source: JPMorgan;WEFA-WMM;MII;McKinseyanalysisJapanCHINAISTHEWORLD’SLARGESTMARKETINTERMSOFSUBSCRIBERS,HAVINGOVERTAKENTHEUSIN2001USMajorEuropean**countriesCAGR=30%CAGR=14%CAGR=7%NumberofmobilesubscribersMillionsCAGR=13%20002005China–lowcase*China–highcase*CAGR=22%e麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略CHINA’SMOBILESUBSCRIBERBASEISGROWINGMORERAPIDLYTHANANYOTHERMAJORMARKET,COMPRISING15%OFWORLDTOTALIN2001 * Afirca,EasternEurope,MiddleEast,Canada ** Forecastof02-05usethehighcase,netsubsafterinactiveandmulti-sim-cardreduction Source: JPMorgan;Gartner2001;DeutscheBank;MerrillLynch;PiperJaffray19971998199920002001E2073004827279651,1781,3931,633100%=GlobalmobilesubscribersMillionsubscribers;percentWesternEuropeUSSouthandLatinJapanandAsiaPacificChina**Restofworld*CAGR1997-2005percent2918452847452002E2003E2004E2005E1,850e麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略CHINA’SMOBILEMARKETISPROJECTEDTOGROWSIGNIFICANTLY *02-05forecastarenetsubsafterinactiveandmulti-sim-cardreduction Source: IDCreport;JPMorganreport;McKinseyanalysisNetsubscriber*additionsMillions199719981999200020012002E2003E2004E2005E–10847133-98-4711AnnualgrowthPercent1237912131516PenetrationPercent47.143.946.345.75.511.516.939.435.9LowcaseHighcaseLow–10847103-9225-13HighLowHigh1237912161923e麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略0%5%10%15%20%25%CHINA’SSUBSCRIBERBASEOF218MILLIONIMPLIESA47%PENETRATIONOFANADDRESSABLEMARKETOF460MILLIONBY2005*Lowcase,netsubsafterinactiveandmulti-sim-cardreduction Source: JPMorgan;DRI;A;Literaturesearch;Analystreports;TeamanalysisIncomepercapita(US$p.a.)2001AddressablemarketNumberofmobilesubscribersImpliedpenetrationoftheaddressablemarket2005E345mn145mn42%463mn218mn*47%ChinaincomedistributionandaddressablemarketPercent1,8151,77220012005China’saddressablepopulationformobileservicesisprojectedtoincreaseby8%p.a.forthenextfiveyearsto460millionin2005Thekeyassumptionsindeterminingtheincomethresholdare:Chineseconsumerswillingtospend5-10%%oftheirincomeoncommunicationservices–higherthantheaverageof3.5-4%formoredevelopedmarketsasagreaterportionofincomeisavailablefornon-essentialgoodsasaresultofChina’srelativelylowlivingcostHalfofthisassumedspentonmobileservices(5.5%)Unicom’sprepaidARPUwilldecreasefromUSD8.3for2001toUSD8.1for2005;thereforethethresholdincomewilldropfromUSD1,815(8.3*12/5.5%)for2001toUSD1,772for2005(8.1*12/5.5%)2005Addressablemarket:35%Addressablepopulation:460mnpersons2001Addressablemarket:27%Addressablepopulation:345mnpersonsPercentofpopulatione麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略MOBILESUBSCRIBERPENETRATIONOFLESSTHAN7%IN2000,LEAVESSIGNIFICANTROOMFORGROWTH Source: JPMorgan;IDCreport;Gartner;Literaturesearch,EIU100%199619971998199920002001E2002E2003E2004E2005EMobilesubscriberpenetrationin2000PercentItalySwedenNetherlandsUKSpainGermanyFranceUSChina**AllsubscribersDataservicesubscribers1,2181,2301,2421,2541,2651,2761,2871,2981,3091,319Aspercentageoftotalpopulation–lowcase*Millions(totalpopulation)ChinaUrban*** *02-05forecastarenetsubsafterinactiveandmulti-sim-cardreduction**Penetrationovertotalpopulation***Penetrationoverurbanpopulation.0.61.01.92.96.68.91.12.03.97.10.412.013.415.016.4e麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略CHINA’SRICHERPROVINCESGENERALLYHAVEMORESUSCRIBERSANDAREGREATERPENETRATED…PopulationMillionsPenetrationPercent,2000SubscriberCAGRPercent,1998-2000NumberofsubscribersMillionsProvinceGuangdongLiaoningZhejiangJiangsuShandongFujianHeilongjiangShanghaiHebeiSichuanBeijingHenanAnhuiHubeiHunan Source: ChinaStatisticalyearbook,JPMorganReport,McKinseyanalysise麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略…WHILETHEPOORWESTERNANDINTERIORPROVINCESHAVELESSSUBSCRIBERSANDARELESSPENETRATED * Growthratefrom1999-2000 Source: ChinaStatisticalyearbook,JPMorganReport,McKinseyanalysisPopulationMillionsPenetrationPercent,2000SubscriberCAGRPercent,1998-2000NumberofsubscribersMillionsProvinceJilinGuangxiYunnanShaanxiChongqingShanxiTianjinInnerMongoliaJiangxiGansuXinjiangHainanNingxiaQinghaiTibetGuizhoue麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略KEYMESSAGES2.Thecompetitivelandscapeformobileserviceshasevolvedfromasingleregulatorandoperatortotoday’sduopolyofChinaUnicomandChinaMobile,bothofwhomareunassociatedwiththeMinistryofInformationIndustries.AsecondbreakupofChinaTelecomisexpectedtoformtwolargetelecomoperators,ChinaTelecomandChinaNetcomGroup,whoarelikelytoreceivemobilelicenses.Afifthtelecomoperator,ChinaRailcom,alsohasthepotentialofreceivingathirdgenerationlicenseandbuildingamobilebusiness.Fornow,ChinaMobiledominatesthemarketwith82%valueshareand72%subscribershareandownsmuchofthehighvalueuserbase.Howeverchurnisalreadyhighandisexpectedtoincreasewithcontinuingpricingpressuresandincreasedcompetition.e麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略CHINA’SMOBILEOPERATORLANDSCAPEHASEVOLVEDSIGNIFICANTLY,CULMINATINGINSECONDBREAKUPOFCHINATELECOMNomobilelicensescurrently

Source: Literaturesearch;EIUPyramid;IndustryreportsChinaTelecomChinaUnicomBecamethesecondmobilenetworkoperatorinmid1994However,ChinaTelecomasthesoleproviderofbothbasicandwirelesstelephonyservicesmadeitdifficultforUnicomtogrowChinaUnicomChinaRailcomChinaUnicomMinistryofPostsandTelecommunicationsCreatedin1994whenformerMPTseparatedintoregulatoryandoperatingfunctionsChinaTelecomownershiptransferredtoMinistryofFinance,withregulatoryfunctionsplacedinthenewMinistryofInformationIndustries(MII)ChinaTelecomChinaMobile(CMCC)ChinaTelecomChinaMobile(CMCC)Underthegovernment’santi-monopolyplan,inthe1sthalfof1999,ChinaTelecomwassplitinto4operatingcompanies:CTfixed,ChinaMobile,CTPaging,CT

SatelliteThechangebecameofficialonApril20,2000Priorto1994,theMPTactedastheregulatorandsoleoperatoroftelecommunicationsIn1993,announcementwasmadetoseparateoperatingandregulatoryfunctionsalongwiththeestablishmentofa2ndoperatorGreatWallEstablishedin1995toharnessPLA’sradiospectrumThecompanyundertakes“theCDMAproject”atthedirectionofthegovernmentGreatWallDuetogovernmentcommitmenttoseparatePLAfromcommercialactivities,GreatWalldissolvedwithdecisiontotransferCDMAassetstoChinaUnicommadeinOctober2000(transferyettobecompleted)2ndlargestfixedlinenetworkEstablishedDecember2000OfferslimitedGSMserviceoverit’srailwaynetworkPre1994RegulatorandOperator1994to1999VirtualMonopoly1999To2002Deregulation/Breakup2002andbeyond2ndbreakupandfuturelandscapeChinaNetcomEstablishedinSept.1999withinternetbackboneLikelylicensewinnerJitongJitongSetupin1994todevelopdatacommunicationserviceBegantoofferVoIPservicesLeadingplayerinvoiceoverIPChinaNetcomGroupChinaRailcomChinaTelecombrokenupintoNorthandSouthwithCTNorthmergingwithChinaNetcomandJitongtobecomeChinaNetcomGroupChinaTelecomSouthcontinuesoperationasChinaTelecomOperatingCDMAlocalloopservicesinseveralcitiesChinaMobileunaffectedbysecondbreakup,survivingproposaltomergeitwithJitong,givenconcernsaboutconsequencesofforcedmergersforpubliclylistedcompaniesChinaUnicomunaffectedbysecondbreakup,survivingproposaltomergeitwithRailcomWhileGreatWallCDMAassettransferhasyettobecompleted,UnicomwillbecomefirstmajoroperatorintheworldwithbothCDMAandGSMservices,withlaunchofitsownCDMAnetworkin2002Operatorbiddingfor3Glicense,withopennesstowardsadoptingChina’s3Gstandard,TD-SCDMAe麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略 Source: Literaturesearch;industryinterviewsBeforeAfterCTbreak-upMOSTRECENTBREAK-UPOFCHINATELECOMTOLEADTOALANDSCAPEOF5OPERATORSCOMPETINGACROSSBOTHMOBILEANDFIXEDLicensesLicensesAnnouncementonNovember26tomergeJitongwithChinaNetcomandChinaTelecomNorthernunitCompetitionwillincreaseasmergedtelecomgiantsobtainlicensesforcomprehensivetelecomoperations,includingFixed-linephoneMobilephoneInternet-relatedservicesOriginalplantomergeChinaMobilewithJitongandChinaUnicomwithChinaRailcom,metwithstrongdissentfromthecapitalmarketswhosawthisasanaffronttoChinaMobileandChinaUnicom’sgovernanceaspubliclyheldcompaniesMobileMobileFixedMobile(GSM-R)FixedFixedFixedFixedGROUPChinaTelecomNorthChinaTelecomSouthMobileFixedMobileFixedMobileFixedMobileFixedChinaRailcomChinaRailcomMobileFixedHavelicensee麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略PROFILESOFCURRENTANDLIKELYFUTUREPLAYERSChinaassetsMobilestrategyCurrentpartnershipsLicenseprospects*Stilltobedecided~96millionmobilesubscribers~30millionmobilesubscribersServicescovering

over180citiesLargestnationaltelecomnetworkcovering2,000

citiesFirstoperatortointroduceinternetaccesscards,andannouncedon-lineshoppingcardtobelaunchedin2001Internetbackbonecovering17majorcitiesStartedIPphoneservicesinJanuary20002ndlargestnetworkinChina;coveringallmajorcities(>500cities)Betechnologyleader,thuseagertoenter3GFocusonhigh-endcustomersTrialingGPRSwith7vendorsStronglysupportingWAPShiftingattitudesontechnology,nowfirstplayertocoverbothGSMandCDMAFocusingattentionondevelopingCDMAnetworksTrialingGPRSwith4vendorsCompeteonserviceofferingwithexistingoperators,leveraginggovernmentandsupplierexpertiseActivewithWLLandlocalmobilityGostraightto3GifpossibleObtainmobilelicenseasquickaspossibleregardlessoftechnologystandardRolloutwirelessdataservicesevenifitmeanstakingGSM/GPRSfirstMayfocusinitiallyonGZ,BJ,SHLikelyintendsfollowing2-tierstructureObtain3Glicensetotargethigh-endusersUse2GPHStotargetvoicesubscribersVodafoneHPHutchisonKDDISKTelecomTelstraAT&TJapanTelecomBritishTelecomNewsCorporationGoldmanSachsSingTelNoneExistingExistingCurrentplayersChinaMobileChinaUnicomLikelyfutureplayersChinaTelecomChinaNetcomChinaRailcom * Governmentlikelytogrant2licenses;undecidedwhen,andwhattype;nonetobeawardedin2001 Source: PiperJaffrey;MerrillLynch;Literaturesearche麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略O(shè)THERPLAYERSUNLIKELYTOATTAINMOBILELICENSES

Source: GoldmanSachs;EIUPyramid;McKinseyanalysisCenturyMobileJitongForeignJVEntrantsNewtelcosWhotheyareBasisforentryObstaclesConsortiumof10enterpriseswhohavejoinedtogethertotrytosetupmobileenterpriseSetupin1994todevelopdatacommunicationservicesPotentialJVsinvolvingforeigncompaniesNewplayersexpandingintotelecomSomegovernmentcontactsOriginallyconsideredtakeoverofGreatWall’sassetsOwns70%ofVoIPmarketGovernmenthasindicateddesiretoseemultipleoperationswithmultipleserviceofferingsGovernmentmaybepressuredtoshowmarketprogressandWTObenefitsForeignoperatorsandentitieseagertoinvestDesiretoenterwirelessgivenopportunitiesandconvergence

oftechnologiesGreatWallassetsmovedtoChinaUnicomNocurrentdiscussionregardingmobileservicesobservedLowcapabilitytoutilizemobilespectrumifallocatedWTOagreementsdonotrequirethatnewtelecomlicensesbeissuedtonewentrantsNationwidepresenceofforeigninvestmentnotpossibleforinitial3yearsunderWTOMIIwilllikelylimittheinfluenceofotherministriesontheirturf(e.g.,blockingSARFTentryintoInternet)e麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略EXISTINGANDPOTENTIALMOBILEOPERATORSHOLDBROADBUTDIFFERENTCOMPETITIVEPOSITIONINGSANDSERVICEOFFERINGSBasicservicesChinaMobileChinaUnicomChinaTelecomChinaNetcomMobilevoiceserviceMobiledataserviceIPMultimediaservice

MobilevoiceserviceMobiledataserviceIPMultimediaserviceLocalcallDLDIDDPaging

IPMultimediaserviceLocalcallDLDIDD

WebhostingNetworkelementleaseandsale

IP

IDD

WebhostingLeaseandsaleofbandwidthValue-addedservicesFaxVoicemailCallerIDCallwaitingSMSVPN/VPDNIDC

FaxVoicemailCallerIDCallwaitingSMSVPN

FaxVoiceVASCallerID

VPNIDCISDN/DDNEDIISPE-mail

DatacommunicationPublicmultimediaservices

Source: MII;Asiacom;Analystreporte麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略EACHEXISTING/POTENTIALMOBILEOPERATORHASSTRENGTHSANDWEAKNESSES

Source: LiteratureResearch;McKinseyAnalysis;IDCChinaMobileChinaUnicomChinaNetcomChinaTelecomChinaRailcomStrengthsWeaknessesIncumbentoperatorservinghighervaluecustomersDominatesmarketwith74%ofsubscribersand84%ofrevenuesAlliedwithVodafonewhoseCEOsitsonboardAccesstoglobalcapitalviaCMHKOfferscompletepackagetocorporatecustomersAbletounderpriceCMandattainmarketshareGovernmentandpolicysupporttopromotecompetitionNofrequencyconstraintduetoCDMAnetwork(13msubcapacity)AccesstoglobalcapitalviaUnicomHongKongStrongmanagementteamwithexecutiveshailingfromsuccessfulstartup(Asia-info),consultingfirmsandbulgebracketinvestmentbanksStronggovernmentalconnectionswithJiangZemin'ssononboardRemainsdominantfixed-lineoperatorDominantindatacommunicationsandinInternetservice2ndlargestfixed-linenetworkFacing2Gspectrumshortageinmajorcities2002/2003Unicomhas10%priceadvantagebyregulationManagementandbusinessstructurenotyetcompletelysetupWeakerbrandandpublicpenetrationthanCMHKFacingcomplexityofdualnetworkmanagementInfrastructurespendhightobuildCDMAnetworkLacksfixed-networkreachHasnomobileoperatinglicenseLacksmobileexpertiseRegulatoryconcernsasMIIlawprohibitingJVswithSOEstargetsrelationshipwithSARFT(oneofthefounders)HasnomobileoperatinglicenseLacksmobileexpertiseCarriesmonopolycultureandlacksbusiness-drivenaggressivenessBoundtofinanciallynonviableruralareaexpansionoffixed-linenetworkUncertaintiesinitsbreak-upplanHasnomobileoperatinglicenseLacksmobileexpertiseLacksscaleandsupportExisting/potentialoperatore麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略MOSTOPERATORSHAVEEXISTINGPARTNERSHIPSWITHFOREIGNPLAYERS * ChinaRailcomisinvolvedinnorelevantpartnershipsSource: LiteratureResearch;AnalystreportsChinaMobileChinaUnicomChinaTelecomChinaNetcomPartnerTypeofpartnershipVodafoneHPHutchisonTelecomKDDISKTelecomTelstraAT&TJapanTelecomBritishTelecomNewsCorporation,GoldmanSachs,etc.SingTelEquantVodafoneowns2%equityshareinChinaMobile(HK)StrategicallianceagreementwithVodafonetobeCMHK’slongtermpreferredpartnerinareasincludingR&Dtechnicalexpertise,standardandprotocoldevelopmentetc.WirelessdataR&DJVbetweenmajorityownedsubsidiaryAspireandHPHutchisonowns1.5%ofChinaUnicom(listed)JointdevelopmentoftechnologyforhighspeedmobilephoneKDDItosupplyCDMAOnemobilephonesStrategicAlliancetoaidChinaUnicom’sCDMAOnenetworkdevelopmentand3GtransitionStrategicalliancetoaidUnicomdevelopCDMAnetworkAT&Towns25%ofShanghaiSymphonyTelecommunicationsMOUinfixedline,mobilephoneandfast-datatransmissionareasforclientcompaniesMOUsignedin1998tocooperateintechnologyandbusinessopportunitiesJointventureprovidingend-to-enddatacommunicationserviceforMNCssetupin1999Partnersbought12%ofChinaNetcomfor$324millioninprivateplacementStrategicalliancetoprovidesafe,efficientdatatransmissionforSingaporecompanieswithsubsidiaries,partnersinChinaServiceagreementtoco-developVPNofferingsOperator*e麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略INMOBILETELECOMSERVICEMARKET,CHINAMOBILEWILLLIKELYREMAINTHEDOMINANTOPERATORINBOTHREVENUE…100%=1998199920002001E2002E2004EChinaUnicomChinaMobile2003E2005E363710Otheroperators000008.411.816.221.127.932.034.538.4US$Billions,percentCAGR

1998-2005EPercent6718N/A

Source: McKinseyAnalysise麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略…ANDSUBSCRIBER*SHARE1997ChinaUnicomChinaMobile3100%=5112543851451551761972181998199920002001E2002E2003E2004E2005EOtheroperator(s)Millions,percent *02-05forecastarenetsubsafterinactiveandmulti-sim-cardreduction Source: DeutscheBank;JPMorgan;McKinseyanalysise麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略 *02-05forecastarenetsubsafterinactiveandmulti-sim-cardreduction**AcquiredbyCMHKfromparentinOct2000 Source: JPMorgan;Industryinterviews;McKinseyanalysisPROPORTIONOFEACHOPERATORS’SUBSCRIBERS*INCLUDEDINLISTEDENTITYMillions,percentChinaMobile23.537.866.3111.0108.4112.9118.7126.61998199920002001E2002E2003E2004E2005E666168656666CMHK100%=Unicom1.55.218.744.047.055.263.567.81998199920002001E2002E2003E2004E2005E626365616162Unicom

Listed100%=8682CMHKProvincesBeijing**FujianGuangdongGuangxi**HainanHebei**Henan

JiangsuLiaoning**Shandong**Shanghai**Tianjin**ZhejiangUnicom(HK)ProvincesAnhuiBeijingFujianGuangdongHebeiHubei

JiangsuLiaoningShandongShanghaiTianjinZhejiang4128Listedcompanye麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略CHURNISALREADYSIGNIFICANTWITHBOTHOPERATORSANDWILLCONTINUETOINCREASEDRIVENBYINCREASINGCOMPETITIONWITHIMPACTGREATESTONCHINAMOBILEPercentChinaMobileHKChinaUnicomCommentsChinaMobile'sbroadernetworkcoverageleadsinitiallytofarlowerchurnratethanforChinaUnicomChinaUnicom'srapidlyexpandingnetworkandhigher-qualityCDMAconnectionwillincreaseCMHK'schurngoingforwardIntensifyingcompetitioncausesbothsetsofchurnratestoriseAsnetworksbecomesimilar,customersappreciatelowerChinaUnicomprice

Source: Analystreport;Companyannualreporte麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略CommentsDecreasingtrendduetoIncreasedcompetitionandlowertariffsIncreasedmixoflow-valueprepaidusersDeepeningpenetrationwhichincreaseslow-valueusershipChinaMobile'sARPUhigherduetoHigherpricesthanChinaUnicomGreaterconcentrationofhigh-endusersbecauseofbreadthofcoverageandmarketpresenceCHINAMOBILEENJOYSGREATERARPU,ALTHOUGHLISTEDCOMPANIESFORBOTHOPERATORSGENERATEGREATERARPUTHANUNLISTEDCMHKUnicom(listed)CM(unlisted)Unicom(unlisted)US$/month

Source: DeutscheBank;McKinseyanalysise麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略 * 100%=75.9millionsubscribersin2001and111.9millionin2005 ** 100%=28.6millionsubscribersin2001and54.9millionin2005 Source: GoldmanSachs;MorganStanley;Teamanalysis-6CHINAMOBILE'SARPUEXCEEDSCHINAUNICOM'SDESPITE

ALARGERPROPORTIONOFPREPAIDCUSTOMERSBlendedARPUUS$/monthCMHKChinaUnicom(listed)20012005CAGRPercent-5Prepaidvs.postpaidARPUcomparisonUSD/monthCAGRPercent-5200120050CMHKChinaUnicom(listed)-1-4PrepaidsubscribersaspercentageoftotalsubscribersPercentCAGRPercent19*20012005CMHKChinaUnicom(listed)43**WAChinaMobile’sARPUexceedsChinaUnicom'sdespitealargerproportionofprepaidcustomersduetoafarhigherpostpaidARPUChinaMobile'shigherpostpaidARPUisduetoitshigh-endcustomerbaseandsuperiormarketingaswellasChinaUnicom'slowertariffschargedPrepaidPostpaidBlendede麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略SharepriceHK$SHAREPRICESFORBOTHOPERATORSHAVEDETERIORATEDIN2001PRIMARILYDUETOPRICINGPRESSURESCMHKChinaUnicomChinaMobileannouncesnewlowertariffpackagesSharepricetookahitonfearsthattariffcutsandspendingonanewCDMAnetworkwilleatintoearningsMIIannouncescancellationofregistrationfeeMarketcapitalizationUS$billions120.469.520.917.5

Source: HongKongstockexchange;DataStreame麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略NONETHELESS,BOTHOPERATORSSTILLENJOYHEALTHYEBITDAANDRETURNONASSETS,DRIVENBYLOWERCOSTBASES,ESPECIALLYCOMPAREDTOCHINATELECOMUS$Billions,2000Player***RevenuePercent

ofrevenuePercent

ofrevenueCMHKChina

Unicom(listed)China

TelecomEBITDAN/ANetprofitROAPercent0.154.744.8N/A18.813.80.5 * TotalChinaMobilerevenue14.3billion ** TotalChinaUnicom(Listed+unlisted)mobilerevenueisUS$1.9billion;listedportioncontributes1.5billion(balancepagingandfixedline) *** NetcomandRailcomfinancialsN/A Source: JPMorgan

e麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略KEYMESSAGES3.WirelessdataservicesareexpectedtogrowquicklyinChinatoamarketofpotentiallyoverUS$4billionby2005,usedby43%ofallmobileusers.Interestfromconsumersurveyshavebeenhighandoperatorsandotherplayersareactivelybuildingservicesinthemarket.WhileearlyWAPserviceshavefailedtocatchon,SMShasgrownexponentiallywithupto20billionSMSmessagesestimatedfor2001.Theearlyadopterswillbemobileprofessionalsandmodernyouth,whowillrequireservicesanddevicestailoredtotheirneeds.e麥肯錫中國(guó)移動(dòng)總體戰(zhàn)略RESULTSOFACHINESEWIRELESSSURVEY(2000)INDICATEDSTRONGINTERESTINMOBILEDATASERVICES * InternetusernumberissignificantlyhigherthanInternetsubscriptionnumber,becauseofthesharingInternetaccessamongusers Source: Mobileusersurvey,2000VeryinterestedInterestedNotinterestedNeutralVeryd