China Telecom Plans to Offer Wireless Service to U.S. Consumers in 2012

By Olga Kharif - Nov 9, 2011 3:02 AM GMT+0700

China Telecom Corp. plans to start selling a wireless service to U.S. consumers under its own brand early next year, seeking to sign up Chinese-Americans, students and tourists who travel often between the two countries.

China’s biggest fixed-line provider will offer users of the service handsets with two lines, one that will work in the U.S. and another in China, Donald Tan, president of China Telecom Americas, said in an interview. Tan declined to discuss pricing, though he said the cost would be “competitive.”

China Telecom, seeking to gain a toehold in the U.S. consumer market, is already in trials with several possible wholesale partners, and will soon choose one as the service’s network, Tan said. He declined to name the U.S. test partners. If the wireless service takes off, China Telecom may consider building or buying its own wireless network in the U.S., Tan said.

“If the service is growing fast, maybe we can set up our own infrastructure,” Tan said. “The money is no big problem for us.”

At the end of June, the Chinese company had $9.6 billion in total current assets, including about $4 billion in cash.

China Telecom’s ability to build or acquire a wireless network in the U.S. may be subject to review by government agencies, such as the Federal Communications Commission or the Department of Justice. Last month, the U.S. government barred Huawei Technologies Co., China’s largest phone-network equipment maker, from participating in a nationwide emergency network because of national security concerns.

Traditional Phone Service

Beyond its fixed-line business, China Telecom provides broadband service and is the country’s third-largest wireless provider behind China Mobile Ltd. and China Unicom (Hong Kong) Ltd. The company, which has 191 million wireline broadband and mobile subscribers, is also looking at making acquisitions to beef up its traditional phone service. It could spend “hundreds of millions or billions” on wireline acquisitions in the U.S., though none is imminent, Tan said.

“We want some acquisitions in the U.S. and other countries on this continent,” Tan said. “It’s a very quick way to growth.”

Verizon Communications Inc. (VZ) and AT&T Inc. (T) are customers of China Telecom’s wireline services. Sprint Nextel Corp. (S) and China Telecom have already interconnected their traditional phone networks.

The wireless service will be China Telecom Americas’ biggest initiative next year, Tan said. As China Telecom’s largest international subsidiary, it has marketed services to U.S. corporations for more than 10 years, offering a wireline broadband link to China. Now the company is turning to consumers, particularly in cities like Los Angeles, Chicago and New York that have large Chinese communities, Tan said.

“During the past 10 years, we went after the enterprise,” Tan said. “Now we need to get more brand awareness in the retail market.” The company may advertise the new service in Chinese neighborhoods, as well as at conferences and events, he said. More than 1 percent of Chinese people live in the U.S., Tan said.

If the wireless service is successful in the U.S., China Telecom may expand it to other markets such as Canada, Tan said.

To contact the reporter on this story: Olga Kharif in Portland, Oregon, at okharif@bloomberg.net.

To contact the editor responsible for this story: Thomas Giles at tgiles5@bloomberg.net