CONTINUING/STEADILY GROWING TELECOM MARKET IN CHINA.

CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), releases an article on the continuing and steadily growing telecom market in China.

Since the first half of 2007, China's communications industry has maintained stable and sound development. In the past few years, China's Ministry of Information Industry established policies in the spirit of accomplishing the goal of becoming a great power in telecom industry. The whole market has maintained rapid growth in the first half of 2007. The total business volume of the telecom industry was 748.2 billion Yuan, growing at 26.1%. Sales revenue in the telecom industry was 351.6 billion Yuan, growing at 9.9% indicating a slight decline compared with the growth rate of 11.4% in the same period in 2006. The gap between total telecom business volume and sales revenue continues to widen. In the first half of 2007, the number of new phone users was 454.28 million and the total number of users was 874 million. However, the number of fixed phone users declined gradually month by month. On the contrary, influenced by the transformation strategy of China Mobile, the number of new mobile phone users is increasing all the time. Since China is soon to release 3G licenses, the restructuring of carriers is still one of the biggest hot spot in its telecom industry.

1. The Number of Users of Telecom Services Are Increasing Steadily

Fixed phone users: The number of new fixed phone users remains at a low level. The number of new fixed phone users is 4.862 million, which makes the total number of fixed phone users, 372.673 million. Among them, the number of new fixed phone users in urban areas is 2.625 million bringing the total number in urban areas to 254.012 million; the number of users in rural areas is 2.236 million, which makes the total number in rural areas, 118.661 million. The number of wireless users declined by 576,000, making the total number of wireless users, 90.551 million. Its proportion to the number of fixed phone users is 24.3%, down 0.5 of a percentage point over the end of 2006.

Mobile phone user: since the second half in 2006, the number of new users has continued to grow month by month. Mobile phone users are increasing all the time. New users nationwide reached 40.566 million, which made the total number of mobile phone users, 501.64 million. It is predicted that this number will surpass 550 million in the second half of this year.

Internet user: More and more Internet users of basic telecom services have started to adopt broadband services. Users connecting to the Internet via dial tone declined by 4.809 million with the total number at 21.611 million. The number of newly subscribed broadband users reached 7.534 million with the total number of broadband users reaching 59.432 million.

2. Sales Revenue of Telecom Services Slow Down in Terms of Growth Rate

The Communications industry continues to grow steadily. However, its growth rate has slowed down, indicating that China's telecom market has entered a stable growing adjustment period. According to the statistics of the Ministry of Information Industry, the total business volume of telecom industry reached 748.2 billion Yuan, up 26.1%; the total sales revenue of telecom services reached 351.62 billion Yuan, up 9.9%. In addition, the development of telecom services can be interpreted quite differently in terms of total business volume and sales revenue. The total business volume of telecom services grew 25.6% and 24.9% in 2005 and 2006 respectively to 26.1% in 2007, while its sales revenue declined 11.0% and 10.7% in 2005 and 2006 respectively to 9.9% in 2007. The gap between business volume and sales revenue of telecom services is widening.

3. Telecom Service Is Accelerating in the Rural Area

As for communications services in the first half of 2007, both the number of fixed phone users and mobile phone users increased by a certain percentage from the previous year. Guided by the "New Rural Community" policy of the Chinese government, communications level in the rural areas increased very fast. Take fixed phone users as an example, the number of fixed phone users in urban areas increased 1.07% while the same number increased by 1.46% in rural areas. The increase of rural fixed phone users over that in urban areas indicates that a great achievement has been made after the promotion of a nationwide ''Extending Phone Coverage to Every Village'' Project, which started this year. However, more investment and effort need be made until communications services will become really popular in rural areas.

4. Gap Among Regional Growth is not Wide, However, the Total Business Volume Is Broadening Further

In the first half of 2007, numbers of fixed phone users in the east, west and central parts of China all increased by a certain degree. The growth rates of communications services over the same period in 2006 were 11.2%, 12.0% and 11.5% respectively. However, no sharp difference among the three regions had been seen in terms of the number of new fixed phone users. Meanwhile, what is worth noting is that the absolute difference between central and west China with east China has further broadened. The unbalanced regional development in China is still a difficult problem that still needs to be considered in China's communications market.

5. The Restructuring of Carriers Is Still One of the Biggest Hot-Spot Problems

This year is a critical point in the telecom industry. This is because after resource integration and policy adjustment in 2005 and 2006, transformation conducted by carriers has been further intensified in 2007. This year is also the year when carriers decided to enhance their efforts in integrating various kinds of services. The restructuring of carriers is at the top of everyone's efforts in re-adjustment. The separate operation of C and G networks by China Unicom and the Competitive Cooperation Agreement signed between China Telecom and China Netcom have all be seen as the prelude of the restructuring of carriers. Though the cloud of restructuring of carriers have been always hanging over China's telecom market, the restructuring of carriers will certainly help to narrow the gap among the four largest carriers and further intensify competition in the 3G era so as to enhance the vitality of the telecom market. This will not only stimulate investment but also benefit consumers.

About CCID Consulting Co., Ltd.

CCID Consulting Co., Ltd. (also known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is a direct affiliate of the China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen and Harbin, with over 300 professional consultants and industry experts. The company's business scope has covered over 200 large- and medium-sized cities in China. Apart from home market development, CCID Consulting is establishing international cooperation links across the United States, the Asia-Pacific region and Europe, by setting up agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.

Based on four major competitive areas of powerful data channels, industrial resources, intense knowledge and deep understanding of information technology, CCID Consulting provides customers with consulting, research and IT outsourcing services covering strategy planning, IT application, marketing strategy, human resources and information technology outsourcing. Our customers range from industrial users in IT, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks.

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