It appears that the influence of telecom operators in China is waning a bit, as it is revealed today that China Telecom and China Unicom’s market capitalizations have been superseded this year by Baidu and Tencent .
According to MIIT’s Cao Shumin, as of February 2012, a group of 56 Internet companies including Baidu, Tencent, Alibaba, Shanda and Netease had revenues totaling some 940.4 billion RMB, accounting for half of the revenue of all three major carriers (China Mobile, China Unicom, China Telecom). Baidu and Tencent in particular accounted for 60% of those revenues, who individually accounted for higher revenues than China Telecom and China Unicom respectively.
Though telecom operators still hold the reigns of the market in the most literal sense, it is still noteworthy that state-controlled enterprises are slowly losing out to private enterprise on the Internet, and this is probably just the beginning.
As the gradual decline in voice and investment revenue takes its toll on traditional telecoms, the industry is coming to a turning point that will be hard to reverse. Telecoms are coming to the realization that the money is not in infrastructure, but in the technology itself. China Mobile, for instance, bought a 15% stake last week in iFlyTek, a maker of voice recognition software that will help it expand its market and compete with Siri. They plan to provide their own Mandarin voice technology in collaboration with the company as soon as the transaction is completed.