AT&T, the telecom giant being bought by SBC Communications for US$16 billion, said its China revenue is set to grow about 20 percent this year as it and its peers struggle to gain a foothold in the tightly controlled market.

AT&T, along with rivals like BT Group and Vodafone Group, held out large hopes for the China market early in the decade, as the country embarked on a multibillion-dollar build-up of its telecom infrastructure.

China is the world's biggest telecom market by users, with 343 million fixed-line and 373 million mobile subscribers at the end of August, according to official data.

Yet, despite the rapid growth and relaxation of investment rules, foreign carriers have been largely left on the sidelines, thwarted by stiff regulation that makes investment difficult, executives say.

AT&T was a pioneer in the market when in 2000 it announced the formation of a US$25 million telecom services joint venture in Shanghai-- the first such venture with foreign participation.

Five years later, that venture, called Symphony, is still largely confined to Shanghai, and AT&T has invested just over US$5 million in China in the last few years, said Steve Lowe, president of AT&T's Asia Pacific region. That figure is just a tiny fraction of the US$10 billion it has invested in Asia in the last three years.

Lowe added that AT&T's China revenue grew 40 percent last year, with about half coming from the joint venture, and is on pace to grow another 20 percent this year.

Despite the growth, AT&T's sales in China still trail those in India, Lowe said, even though Chi-na's telecom development is still several years ahead of India's.

"China is still a very regulated telecom market," he said at an event to announce the company's latest China contract to assist in a global expansion for UnionPay, China's answer to global banking systems like Cirrus and Plus.

"It's a challenging market," he said. "It's very regulated, which puts a lot of control over what companies can and cannot do."

AT&T's slow progress in China mirrors similar experience for Vodafone and BT, both of which have tried to make inroads in the market.

Vodafone, the world's largest mobile carrier by revenue, now owns 3.27 percent of China's dominant mobile carrier, China Mobile (Hong Kong) Ltd., but has little to show for its US$3.3 billion, four-year-old investment.

BT's efforts have also been largely limited to various small initiatives. Last year, BT said it would make its biggest China investment to date by building two nodes for the nation's second-largest fixed-line carrier, China Netcom Group Corp.

The company did not give a value for the deal, but such nodes typically cost between US$900,000 and US$1.6 million to build.

(Shenzhen Daily October 17, 2005)