China Telecommunications Corporation (China Telecom), the country's dominant fixed-line telephone carrier, will not join its domestic rivals in an overseas takeover spree, a company executive said.

"Overseas acquisitions are not a good option for fixed-line operators such as China Telecom to expand into overseas markets," Wang Xiaochu, general manager of China Telecom, told China Daily yesterday.

"Currently our top priority is to expand our customer base in overseas markets" in ways other than risky acquisitions, Wang said.

China Telecom generates overseas revenues mainly from undersea cables and connectivity services such as broadband Internet access to Chinese companies' overseas operations.

China Telecom's annual overseas turnover is expected to hit 1.2 billion yuan (US$153 million) this year, Wang said on the sidelines of a ceremony celebrating the fifth anniversary of China's accession to the World Trade Organization (WTO).

Comparable figures for past years were not available.

China Telecom Corp Ltd, the Hong Kong-listed arm of China Telecom, recorded 84.4 billion yuan (US$10.8 billion) in operating revenue in the first half of this year.

In recent years, Chinese telecoms operators have become increasingly aggressive in building a presence outside the Chinese mainland, which fuelled a mania for overseas takeovers.

Smaller fixed-line operator China Netcom bought bankrupt Asia Global Crossing (AGC) in 2003 for US$120 million plus undisclosed liabilities. Last year it also paid US$1 billion for a 20 percent stake in Hong Kong telecoms operator PCCW Ltd.

China Mobile, the country's largest cellular operator, acquired Hong Kong's fourth-largest mobile operator China Resources Peoples Telephone Co Ltd early this year.

The firm had also been seeking to acquire Luxembourg-based Millicom, which has networks in 16 emerging markets. The bid, estimated at US$5.3 billion, failed in July. It would have been China's most expensive foreign takeover.

Smaller cellular operator China Unicom has also won a licence to provide mobile telecoms services in Macao.

Wang indicated China Telecom would remain focused on expanding its own overseas operations instead of buying foreign companies as a shortcut.

The fixed-line incumbent has established nine operations in overseas markets including the United States, Europe and Central Asia.

Both China Telecom and China Netcom have been coping with a slowdown in their fixed-line voice businesses. "We need to find new revenue streams," Wang said.

But overseas M&As seem to be too risky for fixed-line carriers which are already coming under increasing competitive pressure from their cellular rivals in China, as most consumers are going wireless.

China Netcom Group Corp (Hong Kong) Ltd in June announced it would sell its stake in the unprofitable Asia Netcom, which consists mostly of assets belonging to AGC.

That marks a setback for China Netcom. Company officials have said the firm is shifting its strategic focus from overseas expansion to domestic business.

China Telecom has been transforming itself from a telecoms service provider to a so-called "comprehensive information service provider" to offer integrated voice and data services to customers since 2004.

Such a strategy has helped China Telecom generate a larger portion of revenue from non-voice services.

In the first half of this year, China Telecom's Hong Kong-listed arm generated 23.2 billion yuan (US$2.9 billion) from non-voice services, accounting for 27.5 percent of total revenue during the period.

(China Daily December 12, 2006)