China Telecom has set up shop in the UK just as BT, the UK's incumbent, looks to boost in prospects in China -- see yesterday's story.
China Telecom, the world's biggest fixed-line operator, yesterday unveiled a new European office in London, which will target Chinese firms doing business in Europe and European businesses that want to expand into Asia.
The company plans to work with European operators like BT Group and Deutsche Telekom to offer a range of services, including local area networks, conference calls and video conferencing.
So far, so normal. Every big carrier sells itself as a "one stop shop" for multinational customers with branch offices dotted around the globe. As they are not going to build their own infrastructure in these far-flung outposts, they have little choice but to work with local incumbents.
But China Telecom apparently plans to go further and wants to move into the British home telephony market, according to "sources close to the company" quoted in the Daily Telegraph.
None of the other reports on the official opening of China Telecom Europe made mention of this "long-term ambition" and it certainly would be a strange move. The UK has one of the most competitive residential markets in the world, crowded with resellers, virtual network operators and mainstream phone companies.
Owning a small share of a low-margin residential voice business in a far-flung country is not going to further China Telecom's strategic ambitions much and its contribution to the top line would be minimal.
Of course, it would make more sense if CT owned a network in the UK and there are two or three obvious candidates. But Ou Yan, China Telecom Europe's MD, said the company had no plans for European acquisitions.
Inevitably, the arrival of CT in London has rekindled rumours of a formal tie-up between BT and CT. The latter has been considering selling a minority stake to a foreign operator but BT is just one of several potential candidates and no decision seems imminent.
