Sunday, March 2, 2008

UT IPTV Worldwide and China Subscribers

On July 6, 2005, Softbank launched their iptv service powered by UTs M-vision (what it was called back then).,+2005

On November 2005, China Telecom officially launched their iptv service in Shanghai using UTs solution with a modest 5k target that drew a lot of headlines since Shanghai had 13 million people.

Back then in late 2005, the stock was already "struggling" but managed to surged to the $8-9 range briefly on the news that this was THE turnaround. Obviously, it wasn't. As before, the market is still waiting for the growth in IPTV. During the strategic study by ML in late 2006/early 2007, they highlighted iptv as UTs potential savior but didn't have a good handle on when IPTV would take off and what their situation all over the world.

At this time, UT has shown that it has maintained market share and steadily growing the business in China and worldwide with wins in Japan, China, Inida, Brazil, Taiwan, and Sri Lanka. Strategic wins in the broadband/Pas areas in Italy, Philippines, Pakistan, Argentina, Chile, (Mexico, Russia, Turkey not publicized but...) show that UT has its foot in the door in a lot of places as well. Recently, UT has been providing subscriber numbers worldwide and in China and I have collected and will maintain those numbers as it is critical to one side of the profitability equation. The numbers are directly from UTStarcom, either though a PR or a source mentioned in a particular article.

In China, from the November 2005 start, subscribers grew to about 200k by end of 2006 and to 385k by November and 500k by end of January 2008. By end of 2008, it should be around 1 million just on the number of STB shipping currently. I was going to post potential iptv subscriber growth in China and worldwide but that is a futile exercise as the numbers are all over the place and have been off by a lot in recent years due to uncertain regulatory environment, which still exists today. Most of those predictions in iptv subscribers come from the number of broadband users and penetration rates that iptv can achieve. Since those reports are not worth the paper they are printed (I wonder if those companies charging for them give refunds when they are so off), I will just go with some broadband data I plucked out from the web this morning.

"China ranks second in number of broadband users worldwide People's Daily,June 7, 2007 - Zhao Houlin, Vice Secretary General of the International Telecommunication Union (ITU), said on June 5th that China now has 97 million broadband users. This number of broadband users ranks the second only to the US. The development of the broadband communication industry has gained worldwide attention. At the opening ceremony of Broadband World Forum Asia 2007 held by the China Network Communications Group Corporation, Zhao Houlin said that by the end of 2005, 74 percent of global broadband users were from developed countries, and China made up 17.5 percent. China's rate of broadband popularization is the fastest among developing countries. Zhao Houlin said the ITU expects that "China's successful experience can be used as reference and be applied in other countries, thereby helping to narrow the gap between broadband users the world." At present, China's broadband users has exceeded 50 million; of which China Telecom's broadband access users has exceeded 30 million, and China Netcom's broadband access users has exceeded 20 million."

The numbers are all over the place but broadband users (and the quality of the broadband connections) are going much higher than whatever iptv uptake currently is in China and worldwide in UT markets. Prior to 2007, we only had contract wins but its good the company is providing numbers whenever they release an iptv related PR (as we had wanted them to :-).

I don't want to be overly excited since the penetration rates are still way low and the company is still struggling. I also want to highlight the fact that in the Softbank PR, you could already see the company deploying Rolling stream, Gepon, IPDSLAM and other technologies, which tells you that the company has been spending a ton of money in R&D for a long time to get to where they are (either maintaining those technologies or developing new ones) and they are still not profitable. That is something we need management to discuss with shareholders and the market in general. We are a long way from where we want to get but tangible contracts/subscribers in iptv are validating the potential (not necessarily the return of investment).

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