BT gains vital toehold in Chinese telecom market

Company is first outsider to be granted license

Britain's telecom industry experts welcomed China's latest move to open up its telecom market to foreign players, after BT became the first international company to obtain domestic licenses in China last week.

They said BT's latest milestone highlights the significance of UK-China telecom sector collaboration, especially as the United Kingdom battles to remain globally competitive in the light of Brexit uncertainties.

"As the UK reviews its trading relationships with the world, there has never been a more important time for tech businesses to seek new global opportunities," said Simon Spier, head of international trade at technology industry representative group TechUK.

The UK's international trade secretary Liam Fox expressed similar enthusiasm, hailing BT's new licenses as a "major milestone", which exemplify the efforts of his department to "open up markets and ensure that UK companies are represented on the global stage".

Danny Mu, principal analyst at the research company Forrester, added BT's latest licenses are an excellent example of China's telecom sector opening up.

"China's government has kept pushing the telecom industry to accelerate the pace of network performance upgrades and tariff reductions across the country, so a newcomer like BT might introduce differentiated customer experience," said Mu.

Last week BT received two licenses from China's Ministry of Industry and Information Technology, in a move that will allow it to provide direct communications and connectivity services for customers in China.

BT said customers most likely to derive benefits are multinationals with China operations.

"We are delighted with this major benefit for our customers," said Bas Burger, BT's CEO of Global Services.

The "China Nationwide Domestic IP-VPN" license BT has been given will allow it to provide network services to customers in China, whilst the "China nationwide Internet Service Provider" license allows it to provide internet access services.

"Being able to service and bill locally significantly simplifies the process of delivering connectivity and other communication services," said Burger. "It is what our customers expect from us and we are very grateful for the opportunity to do this as of today."

Mu said the new licenses can simplify BT's service delivery for its customers, and make its offerings more attractive for both multinationals in China and Chinese companies going global.

Mike Cansfield, associate vice president of telecoms and networking at IDC, said it appears the move is "quite a coup" for BT. "With most of Global Services 800 target customers having some operations in China, then being able to also provide some domestic in-country services too should enhance its attractiveness as a supplier to this select group," he said.

On the other hand, however, Cansfield pointed out that despite BT's new licenses in China, it is still a small player compared to China's domestic telecom providers.

"China is a huge market and the indigenous providers will be far stronger than any new entrants could be for many years to come."

Cansfield also pointed out that the new ambition BT expressed in China is somewhat at odds with the strategy outlined by Burger in late 2018, that BT hopes to become a "smaller company, leaner and partnership-driven" company, and he cautioned over the effectiveness of BT's strategy.

"China is a big place, and adding (China) capability seems to be the opposite of creating a more focused business. To deliver service is such a huge country a non-indigenous telco needs boots on the ground which both their existing partners can provide but BT by itself will be unable to do this for quite some time."

There are still some telecom services BT cannot provide despite its new licenses, such as data center services and call center services, BT confirmed.