If the number of times a CEO visits any given market is an indication of its importance, then China must be very significant for Australian telecom giant Telstra.

Since Sol Trujillo took over the helm of Telstra in July 2005, he has visited China four times and his visits have paid off.

In August, Telstra acquired a 51 per cent stake in Beijing-based real estate portal Soufun.com for US$254 million through its directory and advertising subsidiary Sensis, thus entering the nation's booming Internet market.

Industry sources said the firm is also considering establishing an alliance with China Telecom, the nation's largest fixed-line operator, which operates in much the same fields and has similar plans to boost its broadband, wireless and Internet businesses.

Telstra's ambition in both basic and value-added telecom services in China, as shown from its interest in China Telecom and Soufun, is a typical example of foreign companies' interest in the world's most populous telecom market since the nation joined the World Trade Organization (WTO) five years ago.

"Joining forces with Chinese operators and bringing value is good, but one should not take control," said Igal Brightman, global managing director of technology, media and telecommunications with the consulting giant Deloitte.

According to China's commitment to the WTO, the maximum stake that foreign investors can hold in telecom joint ventures has been lifted from 35 to 49 per cent, while they are no longer restricted to 17 large cities.

When China was negotiating its WTO entry, its telecom industry remained in its infancy mobile phones were regarded as a luxury product by most people and they needed to wait for almost one month to have a fixed-line phone installed.

As a result, with their financial and technological strength, foreign operators thought China's WTO membership would give them access to a hugely lucrative market.

Since China's WTO accession in December 2001, Chinese operators have made dramatic progress and spent hundreds of billions of dollars, partly prompted by the activities of international equipment vendors such as Ericsson and Motorola.

China has therefore become a place where global telecom equipment vendors test their best products.

In addition, China's fixed-line subscribers rose by twofold to 370 million and mobile subscribers grew by three times to 450 million.

1

2

(For more biz stories, please visit Industry Updates)