China Telecom May Expand to France, Germany After U.K.

China Telecommunications Corp. (728), the nation’s largest fixed-line phone company, plans to expand into more European markets after starting its first overseas wireless service in the U.K.

The service, aimed at Chinese residents, will begin in the U.K. by the end of March and expand to Germany and France if it’s successful, Ou Yan, managing director for China Telecom Europe, said in an e-mail yesterday. There are 2 million Chinese living in western Europe, Liu Changhai, the China Telecom executive responsible for regional development, said yesterday.

In the U.K., China Telecom will target the more than half a million Chinese citizens living in the country and the tourists that will flock to the Olympic Games in London in June. In China, intensifying competition has led companies including China United Network Communications Group Co. (CHTZ) to cut international roaming fees by as much as 90 percent.

“Our target customers are the Chinese communities,” Liu said in an e-mailed response to questions. “We are exploring a new market.”

London-based China Telecom Europe is a subsidiary of the state-owned parent company and isn’t part of publicly traded China Telecom Corp., said Jacky Yung, a Hong Kong-based spokesman for the listed unit.

The U.K. service will run on the network of Everything Everywhere, the joint venture between France Telecom SA (FTE) and Deutsche Telekom AG (DTE), the company said yesterday. The company will become the first Chinese operator to start a mobile virtual network outside China, Liu said.

Roaming Rates

Setting up a mobile virtual network will help China Telecom, the nation’s third-largest wireless carrier, compete on international roaming rates with China United, according to Neil Juggins, a Hong Kong-based analyst at JI Asia Research Ltd.

China Telecom will lease capacity from Everything Everywhere. It also held talks with Vodafone Group Plc (VOD)’s wholesale business, people familiar with the matter said in September.

China Telecom signed a strategic agreement with France Telecom in October to provide services for business customers across each other’s networks.

China Telecom’s wireless service ranks behind China Mobile Ltd. (941) and China Unicom (Hong Kong) Ltd. in the world’s largest mobile market by users. China had 975 million mobile subscribers at the end of November, according to the Ministry of Industry and Information Technology.

To contact Bloomberg News staff for this story: Jonathan Browning in London at jbrowning9@bloomberg.net; Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editors responsible for this story: Kenneth Wong at kwong11@bloomberg.net; Michael Tighe at mtighe4@bloomberg.net

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