China Telecom has teamed up with the UK's largest mobile operator Everything Everywhere to launch a mobile phone business in Britain.
Under the terms of the deal, China Telecom (Europe) – China Telecom’s wholly-owned subsidiary for Europe, the Middle East and Africa – will provide services directly to its own customers over Everything Everywhere's network, making it the first Chinese mobile virtual network operator (MVNO) to be launched outside of China.
The strategic partnership, which will require China Telecom to pay an undisclosed amount for the use of Everything Everywhere's network, was secured via Everything Everywhere’s mobile virtual network aggregator Transatel. Transatel’s MVNO platform will reportedly allow China Telecom (Europe) to launch its service in the UK “within months”.
“Entering the UK mobile market is a strategic move for China Telecom (Europe),” said Yan Ou, Managing Director of China Telecom (Europe). “We selected Everything Everywhere based on the strength of its network, and Transatel’s proven track record of getting MVNOs up and running quickly and efficiently.”
China Mobile is keen to roll out its service in Q1 2012, ahead of a predicted increase in visitor numbers to London during the Olympic Games this summer. “There is a real gap in the market for the provision of tailored mobile services and competitive tariffs aimed at the growing Chinese population in the UK,” added Yan Ou.
State-owned China Telecom is the nation's top fixed-line operator and the third for mobile networks. Its European arm was established in 2006 and is based in London. It also has a wholly-owned subsidiary in Frankfurt, and representative offices in Moscow and Dubai.
In December 2011, US operator AT&T and China Telecom signed an agreement to share telecommunications infrastructure across the US and China. Under the agreement, the carriers will take advantage of each other's infrastructure to expand virtual private network (VPN) and cross-country services geared for international companies.
According to analyst house Ovum, however, the impact of China Telecom's expansion in the UK is likely to be relatively muted. Data from the office of National Statistics published in May 2011 estimates just 0.82 percent of the population in England and Wales are of Chinese decent and addressable by this deal.
"The company’s main selling point is likely be cheap calls home. However, the likes of Lyca Mobile and Lebara already offer this," said Steven Hartley, Ovum’s telecom strategy practice leader. "These rivals are also able to sell to a broader audience wanting to call other countries aside from China."
Hartley added that China Telecom is the smallest of the three Chinese mobile operators, with just 12 percent domestic market share, so the brand will resonate less than the likes of China Mobile and China Unicom.
Everything Everywhere is the largest mobile operator in the UK by customer numbers, following the merger of Orange and T-Mobile UK last year. It offers the largest 3G network in Britain, and recently announced plans to invest £1.5 billion to upgrade its existing network in preparation for the rollout of 4G mobile technology.
The China Telecom deal takes the company’s portfolio of MVNO partnerships to 24, with others including Virgin, Ikea, Cable and Wireless and Talk Talk Business.
“Everything Everywhere offers MVNO customers the biggest 3G network and widest 3G coverage in the UK, making us the partner of choice for MVNOs,” said Marc Overton, vice president of wholesale and M2M at Everything Everywhere. “We look forward to growing our partnership with China Telecom (Europe) in the future.”