Tony Munroe and Jonah Greenberg
BEIJING: AsiaInfo Holdings Inc., which sells software and services to China's
telecommunications firms, expects demand to grow as the country's two fixed-line
giants move faster than expected to poach each other's customers.
AsiaInfo also planned to expand its target market beyond telecom by the end
of this year, probably through acquisitions, James Ding, AsiaInfo's 37-year-old
chief executive, said in an interview on Monday.
Ding said China's two reconstituted fixed-line giants, formed in May along
north-south lines as part of a massive restructuring of the telephone industry,
were already planning incursions onto each other's turf. "The key impact,
which is quite a surprise to many people, is that they're very actively planning
for the expansion into each other's parts," Ding said.
Southern carrier China Telecom, which ceded its 10 northern provinces and
cities to upstart China Netcom Group, had "already started bidding plans
for some of their projects to help build the local data networks in the
north", he said.
"It's much faster than we thought," Ding said in his office in the
western part of Beijing where many of China's young technology firms are based.
"It means a lot more opportunities," the mild-mannered Ding said.
"It's very encouraging for us."
Restructuring begets competition
AsiaInfo, along with sellers of hardware to China's telecom sector, had been
frustrated as the restructuring of the creaky fixed-line sector dragged on
longer than expected.
And many industry watchers questioned whether the decision to split
near-monopoly China Telecom along geographical lines would do anything to boost
competition. But Ding said the two carriers would go after high-end business
customers in each other's markets, offering services such as broadband
connections. "Probably Netcom will be a bit more aggressive," he said.
Before being merged along with Jitong Communications into the 10 northern
China Telecom provinces, China Netcom operated a high-speed data network, which
it retained in the restructuring. "Netcom will have a better starting point
because they already have a lot of the infrastructure in the southern part
anyway," Ding said.
Beyond telecom
Ding said AsiaInfo, which also provides systems integration services and
gets all of its revenue from the telecom sector, intended to tap other markets
by the end of the year, starting with the finance, insurance and power sectors.
"We believe that definitely we will go beyond telecom by the end of the
year," Ding said. Revenue from non-telecom sources could account for 20-30
per cent of turnover by 2004, he said, but declined to identify potential
acquisition targets.
Ding said the company had no current interest in seeking business beyond
China. "We see our counterparts in the US are getting hit pretty
badly," he said. "It's not very attractive outside China right
now." Ding cited the woes of US-Israeli telecom software firm Amdocs, which
said last week it would cut up to 1,000 jobs, or 10 per cent of its workforce,
and slashed its revenue targets amid a dismal telecom spending environment.
AsiaInfo, due to report second quarter results on July 24, has said it
expects net revenue to grow by roughly 20 per cent year-on-year to US$19.5-$20
million, with net income of between $3-$3.5 million, or seven-to-eight cents per
basic share.
(C) Reuters Limited.