The Government has offered Australia's three mobile operators, and vividwireless, renewal of their existing spectrum allocated on 15 year licences in the late 90s and early 2000s at set prices, while the Government expects to rake in $3 billion.
In its bid to generate annual revenues of $A1b from China by 2013, Telstra will invest $302m to acquire controlling 67 percent stakes in two mobile content and online music businesses. - China M and Sharp Point.
Telstra CFO John Stanhope said the investment would be spread over three fiscal years: $178m this year and $124m in the next two fiscal years. Telstra expects pro forma revenues from the two businesses to be around $A100m in fiscal 2009. It intends to fund the acquisitions from existing cash facilities.
China M is a supplier of consumer mobile content serving 350,000 customers daily. Sharp Point provides technical services for China Mobile's central mobile music platform. Telstra claims that both businesses enjoy strong commercial and contractual links with the country's mobile telecoms providers.
Telstra claims to already be a market leader in three key online business segments in China real estate, automotive and consumer electronics. The company sees opportunities to leverage its expertise in delivering content over 3G mobile networks as China moves into 3G - licences were recently issued to the countries major telcos.
Telstra started its love affair with China early in CEO Sol Trujillo's reign. In 2006 it acquired a 51 percent stake in China's number one real estate site, SouFun. This was followed in mid 2008 by the acquisition of 55 percent of two Chinese Internet businesses in the online auto and digital device advertising sectors: Norstar Media and Autohome/PCPop, for an undisclosed amount.
Norstar operates the Che168.com auto site and digital device site IT168.com. Autohome/PCPop, operates the leading auto site Autohome.com.cn and popular digital device site PCPop.com. Telstra said it would merge the two businesses claiming the move would put it in a strong strategic position in the Internet advertising market of the world's most populous nation
Commenting on today's announcement, Trujillo said: "Our success with the Telstra Next G network shows that Telstra knows how to offer customers a compelling mobile data experience. We are now exporting that expertise to China."
Telstra points out that China is already the world's largest online market and the world's largest mobile phone market with more than twice as many mobile subscribers as any other nation – and penetration still at only 50 percent. Nor is Telstra worried about the dampening effects of the global financial crisis.
"Telstra is now well positioned to benefit from China's predicted near-term economic growth of six to eight percent, as well as the expected rapid increase in the penetration of mobile phones and personal computers, and the imminent shift of Chinese consumers from 2G to 3G handsets," the group managing director of Telstra Media, Justin Milne, said.
Despite the global financial crisis, China is forecast to be the fastest growing large economy in the world, with the International Monetary Fund forecasting growth of 6.7 per cent in 2009 and 8.0 per cent growth in 2010.
David Bass
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