ChinaMobile-thumb.jpgStill
think China's mobile telecoms market offers boundless opportunities?
Fitch Ratings brings investors down to earth in a report that warns of growing risk in the Asian telecoms industry.

Fitch
says that while mobile has underpinned growth throughout the region in
recent years, operators are seeing profit margins fall because of
“aggressive price-based competition” and increased subsidies.

It picks out the chronic delay in issuing China's 3G licences as a particular risk factor — see this EngagingChina story for more on the 3G saga. Jonathan Cornish, head of Fitch's Asia-Pacific Telecoms, Media & Technology team, says:

There
is still ongoing uncertainty in emerging markets, though none more than
in China where the government is yet to announce what changes and
sector restructuring it may implement, including the number and type of
3G licences.”

Of course, China bulls will argue
that, unlike Asia's more developed economies, China still has
tremendous growth potential. Indeed it has, if we are talking about
subscriber growth.

But once the low-hanging fruit have all been
picked, China's mobile operators will face the same issues facing those
in more developed markets: deteriorating quality of the subscriber
base, growing churn, rising handset subsides, the cost of migrating to
3G, stubbornly small non-voice ARPU, etc.

Nevertheless, Fitch
picks out China Mobile, the world's largest wireless carrier, as one of
the Asian operators that has materially strengthened its underlying
credit profile in the past 12-18 months.

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