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China Telecom sets ambitious U.S., global expansion efforts

But U.S. expansion could be a big challenge
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China Telecom on Thursday revealed plans to expand its global business unit, a move it says will drive CNY 10 billion (USD 1.6 billion) in sales this year.

Wang Xiaochu, China Telecom's chairman, said in a China Daily report that the service provider saw potential for its international business, including Asia Pacific, Europe, and the Americas after developing its China Telecom Global division in August.

In 2011, the telco reported that the international business delivered CNY 6.7 billion (USD 1.07 billion). In addition to organic growth efforts, the service provider said it will aggressively purchase other international assets to expand its presence in the three overseas regions it serves.

"It is for sure that China Telecom will conduct M&As globally, and we are training talent to be more well-prepared," said Wang.

One of China Telecom's largest international markets is the United States, a region to which it has been providing service since 2002. In addition to opening an office Chicago, the service provider began offering a new mobile service in January.  

Another key reason for establishing a foothold in Chicago is that it can attract potential customers that have branch offices in China that it can serve via its parent company.

Another key development in the U.S. market came last November when China Telecom expanded its relationship with AT&T, which will allow China Telecom to improve services to Asian customers in the U.S. over AT&T's (NYSE: T) network. The two telcos have worked together since 2000, when they formed the Shanghai Symphony Telecommunications Co. joint venture.

However, one analyst says that given the recent government opposition to Chinese-based companies Huawei and ZTE, China Telecom could face similar challenges in serving the U.S. market in a significant way.

"Given the failure of Huawei Technologies Co Ltd and ZTE Corp in their attempts to gain a foothold in the U.S. market, I am not optimistic that China Telecom, a truly State-owned Chinese company, will do any better," said Xiang Ligang, a Beijing-based telecommunications expert who also runs the industry information website cctime.com.

For more:
- China Daily has this article

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