China Unicom (CHU) has secured the opportunity to build telecommunication infrastructure in Tibet. The third-largest Chinese wireless carrier has reportedly entered into a five-year pact with the government of Tibet autonomous region under which China Unicom will spend as much as RMB1.8 billion (US$264 million) over the deal term to upgrade Tibet’s IT/communication infrastructure.
 
China Unicom and the Tibet autonomous regional government will work together to develop various IT-based sectors in Tibet, such as telecom infrastructure and E-government business, as well as the information infrastructure of small businesses and rural areas.
 
Tibet’s telecommunication sector is growing rapidly (sales increasing at an average annual rate of 30%) over the last two years, offering an attractive business opportunity for the incumbent Chinese telecom carriers. The sector registered roughly 18% year-over-year growth in revenues in the first nine-months of 2009.
 
Initiatives are underway to make telephones and fiber-optic network accessible to every Tibetan village and town. Moreover, construction of the 3G network is also progressing well with around 72 counties and districts in urban areas of Tibet being already brought under network coverage.
 
China Unicom’s peers China Mobile (CHL) and China Telecom (CHA) have launched their respective 3G network in the Tibet Autonomous Region in May 2009. Both China Mobile and China Telecom previously announced their aggressive investment plan as they have allocated RMB5.05 billion (US$740 million) and RMB2.5 billion (US$366 million), respectively, to support Tibet’s economic and communication infrastructure development. Part of these investments is directed at expanding the availability of 3G base stations in the region.
 
Currently, broadband penetration in Tibet is 40% of all administrative villages with efforts underway to cover 60% of the total villages in the region by 2011. However, communication infrastructure and coverage in Tibet is still less than satisfactory, given the challenges in building networks in large farming and pastoral areas. However, things will improve as China’s big three operators direct their resources to boost communication services in the region.
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