It looks like e-wallets and mobile commerce are on top of agenda for large telecom companies. China Mobile agreed to buy 20 percent of Shanghai Pudong Development Bank for 39.8 billion renminbi ($5.8 billion) to expand its electronic payment business.

China Mobile wouldn’t be alone in investing in financial firms. South Korea’s SK Telecom Co. last year agreed to buy a stake in Hana Financial Group Inc.’s credit-card unit for 400 billion won ($349 million), while Globe Telecom Inc. in the Philippines agreed to buy 40 percent of BPI-Globe BanKO Savings Bank in 2008. Nokia, the world’s biggest maker of mobile phones, last year bought a minority stake in Obopay, a supplier of mobile banking services in the U.S. and India.

China Mobile Chairman Wang Jianzhou said that “this investment is an extension of our core telecom business. We see big growth potential in the profitability of the mobile financial business.”

Mr. Wang added that he expects the deal to boost the company’s earnings per share by 2% once completed.

Pakistan Telecommunication Authority is doing great in its 668 Campaign to wipe-off illegal SIMs, but what about the illegal mobile handsets? When I say illegal cell phones, it means cell phones without a valid IMEI (International Mobile Equipment Identity usually China made.

The operators in India have reportedly blocked 25 million such handsets on orders of the Department of Telecommunication. After susscessful 668, PTA should have this on its hit-list.

News item from The Nation gives the following details:

A significant quantity of Chinese-made handsets are available in Pakistan that come without valid International Mobile Equipment Identity (IMEI) that has posed serious threats to the national security as such phones have allegedly been used by the terrorists.

It was found that the lack of unique IMEI numbers has made it impossible to detect the suspected calls from a specific handset. It was further learnt that IMEI series allocation happens only in hardware type approval.

Moreover, these Chinese handsets are fully functional, however, they lack IMEI programming because Chinese manufacturers are usually not registered companies thus no IMEI range is allocated to them.

The government of Pakistan has yet not initiated any plan to combat this issue. On the other hand Indian media has reported that as many as 25 million Chinese handsets were blocked in India which were available in the market without valid IMEI numbers. It was reported that the move came after The Department of Telecommunications, India (DoT) had instructed the operators to block cell phones without a valid IMEI number.

In this regard several phone sellers have confirmed that the Chinese handsets are usually the duplicates of branded phones. These mobile phones are without IMEI numbers which are typically low-end handsets manufactured by the small Chinese phone manufacturers who cut their costs by skipping the IMEI programming stage.

They were of the view that cellular companies and manufacturers in the country are heeding to adopt the prerequisites in this regard but they have yet to streamline mobile connection ownership issues.

“Let’s not expect any super natural thing in Pakistan regarding this in near future,” commented an official. He further said that the cellular operators in India had offered such subscribers to either discard their handsets or bring them to official outlets of cellular companies to re-programme their IMEI numbers.

Huawei was once regarded as a low cost telecom equipment provider. An excerpt from a Wall Street Journal article which talks about how Huawei is now challenging its competitors with better quality products.With sales of $18.33 billion in 2008 it has a huge impact on telecom industry.

Huawei Technologies Co.’s challenge to European rivals has largely focused on its pricing advantage. But industry watchers say the Chinese network-equipment vendor, which last week won a contract from Belgian telecommunications provider Belgacom SA, now has another key selling point: the quality of its technology.

Analysts say Huawei Technologies is increasingly competing on quality, not just prices, especially in Europe.

As the telecom industry emerges from the global economic slump, European telecommunication-gear companies—global market leader Telefon AB L.M. Ericsson; Nokia Siemens Networks, a joint venture between Finland’s Nokia Corp. and Germany’s Siemens AG; and Paris-based Alcatel-Lucent SA—are likely to face increased pressure from world No. 2 Huawei in their own backyard.

Huawei, which like smaller peer ZTE Corp. is based in the southern Chinese city of Shenzhen, was founded 1988, and revenue and earnings have risen steadily.

Its sales increased to $18.33 billion last year, the latest figure available, from $5.98 billion in 2005, while profit rose to $1.15 billion from $681 million.

While European vendors have, to some extent, been able to keep these low-cost Chinese rivals at bay through superior equipment, Huawei is growing quickly both because it offers lower prices than most rivals and because the quality of its equipment is getting better, said analyst Scott Siegler at research firm Dell’Oro, based in Redwood, Calif. “When we talk to service providers that use Huawei’s equipment, we have been told that it is excellent technology, he said.”

Huawei’s share of the global infrastructure market almost doubled in revenue terms to 20.1% from 10.9% in the third quarter from a year earlier, leaving behind Nokia Siemens and Alcatel-Lucent, according to Dell’Oro.

Now that economy in some countries seems to be stabilizing, there is a new push to sell. In this picture, HP is following the trend which was once used by Nokia: send buses to rural areas to cultivate buyers. This may work in China where buying power is rising but I doubt if it will be useful in other countries. But if you are going to send a bus, then why not pack it with all kinds of electronics and may be a window for customer service!

Pakistan and China signed memorandum of understanding to cooperate on a number of technology and industry initiatives. One of the MoU is on Global Open Trunking Architecture (Gota) for Emergency Communication and Disaster Control management in Pakistan between Ministry of IT and Telecom (National Telecommunication Corporation) and ZTE Corporation People’s Republic of China.

Wikipedia defines Global Open Trunking Architecture as:

In telephony, GoTa or “Global Open Trunking Architecture” is a CDMA-based digital trunking system. The GoTA system was developed by ZTE, a Chinese manufacturer. The GoTA system can be used for both private and public trunking network applications.

GoTa is capable of providing a variety of trunking services:

* One-to-one private calls and one-to-many group calls
* The ability to set the user’s priority
* The ability to perform forced insertion/forced release based on the user’s priority
* The ability to provide special services such as system paging, group paging, sub-group paging, and dedicated Push-To-Talk services as required
* The ability to classify the groups into permanent and temporary groups, in which the group members can be managed by the user.

As reported by WSJ. Just like Pakistan, Chinese consumers are unofficially enjoying iPhone already. Imported iPhones currently sell on the gray market in China for as little $680, and those have Wi-Fi (the official phones will not have Wi-Fi because of a Chinese govt regulation). Unicom’s challenge will be to price the iPhone at a level that is competitive but still doesn’t hurt its average revenue-per-user.

The highly anticipated release of the iPhone in China — which has 687 million wireless subscribers, more than twice the population of the U.S. — is expected to be a boost for both Apple and Unicom, one of three Chinese state-owned telecommunications carriers. Still, the two companies face challenges to realizing the iPhone’s potential in China, including competition from similar devices, and the companies left several key questions about pricing and other details unanswered Friday.

The release of the iPhone in China could turbocharge overseas growth for what is already Apple’s fastest-growing product. China is the world’s largest mobile market by subscribers, with some 687 million subscribers. That compares with more than 270 million subscribers in the U.S.

In China, however, touch screens are hot, and there are already a number of popular models that have no keypads. The Apple name has value as a status symbol, and Internet usage through cellphones is increasing.

Competing products are already in the works in China, adding urgency to the iPhone’s launch. China Mobile Ltd., the country’s largest carrier by subscribers, plans to start selling smart phones with similar functions to the iPhone this year based on Google Inc.’s Android operating system. On Monday, Taiwanese phone maker HTC Corp. announced it plans to launch seven third-generation phones, including at least one Android phone, with China Mobile by next year.

Launching the iPhone in China would likely boost Apple’s small presence in the country. Apple currently has less than 1% market share in personal-computer shipments in China. In the second quarter, Apple sold only about 36,000 units out of 11.7 million PCs shipped in China, according to IDC.

One indication of the iPhone’s strong potential in China is the thriving underground iPhone market that already exists there. Though the device isn’t officially available, BDA estimates there are already 1.5 million iPhones in use in China, and the handset is on sale everywhere from online vendors to resellers of Apple products in sprawling electronics malls.

People can use the iPhone and buy applications on Apple’s iTunes store by unlocking the device with software that enables it to work with any network operator, even if they aren’t approved by Apple.

Ever looked at a fake copy of a branded phone and wondered how much to pay for it? Take a look at the information below (via WSJ). Interesting to see the high margins these phones enjoy at retail. No wonder why the market is flooded with fake phones.

Newsweek ran a story about how Huawei is good with engineering and keeping its prices low but has challenges with branding. See excerpts below. Is that the case with Huawei in Pakistan as well?

[Huawei] has built its success the old-fashioned Chinese way—by selling to other businesses, rather than directly to consumers around the world, and by competing on price rather than on innovation. Its founder and CEO, Ren Zhengfei, is the anti–Steve Jobs—he has never given an interview to the foreign press. Huawei Internet routers and cell-phone switches (with names like Quidway-S9300 Series Terabit Routing Switch and GSM/UMTS Home Location Register 9820) are used by many of the world’s biggest telecom carriers, including the likes of Vodafone, providing phone service to more than 1 billion people worldwide.

The article talks about how Chinese companies, many of them technical, handle branding. Huawei has to face scrutiny due to its ties with the Chinese government. Its a double edge sword as they have benefited from that relationship as well.

Chinese approach brands—as a fact or skill set to acquire, not an art to master. Wen’s speeches on the issue, and new Beijing loan programs to address it, reflect this thinking. So do the efforts of local governments in cities like Dongguan, a major export hub that still focuses mainly on assembling products for Western brands. Officials here admit that local firms have little or no brand savvy, and they are pouring in money to fill the gaps. Using part of a $20 billion stimulus package from Beijing, they are subsidizing companies that set up R&D centers, train staff in marketing, and register trademarks.

The state connections of all big Chinese companies still raise red flags among customers. Huawei dropped a joint $2.2 billion bid for American telecom equipment maker 3Com last year after U.S. lawmakers called the deal a threat to national security. It withdrew an earlier bid for Marconi, a landmark British electronics and information-technology firm, after Conservative Party leaders called for an investigation of whether China’s government could use Huawei ties to Marconi to spy on the British defense industry.

Huawei executives say accusations that China could use their equipment to steal sensitive data are ludicrous. But, as every good marketer knows, perceptions matter. If Huawei wants only to cultivate a few hundred elite industry buyers, perhaps it can explain itself to them directly. But if China hopes to build dominant names in the global consumer market, it needs a very different role model. One that has some interest in becoming a famous name.

Few days back, there was rumour on TGP of possible merger of Telenor and Zong. Dawn News has confirmed of possible merger negotiations.

According to sources, Telenor group is interested to sell its shares in Pakistan and is holding talks with the China Mobile.Though both the operators have denied any such development, sources said that negotiations were being held secretly at the group level.

Though Telenor, a Norwegian company, has a subscriber-base of 20 million or so in Pakistan, it has been deliberating to sell its management shares since long because of ‘security issues’.

The Telenor group has already focused on India for investment, as it recently sought to buy about 67 per cent shares of Unitech Wireless and telecom arm of Unitech Ltd in India.

The Indian market is experiencing a major growth in mobile penetration and currently it stands at 27 per cent with a total population of about 1.2 billion.

There has been a lot of potential in the market and the global operators see it a best place for future market. China Mobile’s first international business venture, Zong, currently has over six million subscribers.

Before the merger talks with the Telenor group, the China Mobile had offered to buy the management shares of Warid Telecom Pakistan. However, deal could not materialise owing to price issue.

Mobilink, Telenor, Ufone, Warid and Zong (CM-Pak) have reportedly conveyed to the PTA that there was a room for only ‘four’ players.

A PTA official said there were chances that by 2010, the country may have four operators.

The number of cell-phone users in Pakistan has reached over 90 million. Though Average Revenue Per User (ARPU) shows declining trend over the last few years, aggressive marketing and expansion of network has enabled mobile operators to grab more subscribers on their networks.

[via DAWN.COM]

New York Times wrote an interesting piece about the large number of counterfeits and no-name knockoffs produced in China. This goes beyond the business issues. There are health hazards associated with these phones, due to excessive radiation or exploding batteries.

The article notes that “Technological advances have allowed hundreds of small Chinese companies, some with as few as 10 employees, to churn out what are known here as shanzhai, or black market, cellphones, often for as little as $20 apiece.”

Alarmed by the rapid growth of counterfeits and no-name knockoffs, global brands are pressing the Chinese government to crack down on their proliferation, and are warning consumers about potential health hazards, like cheap batteries that can explode.

So far, however, China has done little to stop the proliferation of fake mobile phones, which are even advertised on late-night television infomercials with pitches like “one-fifth the price, but the same function and look,” or patriotic appeals like “Buy shanzhai to show your love of our country.”

Last month, the Ministry of Industry and Information Technology did warn consumers about the hazards of shanzhai phones, saying “their radiation usually exceeds the limit.” China’s consumer protection agency says faulty mobile phones were the No. 1 consumer complaint last year.