Australian incumbent pitches itself as a route into China for foreign companies.
Telstra on Wednesday discussed how it might capitalise on China’s digital transformation by pitching itself as an enabler for foreign enterprises hoping to crack the market.
This was one idea posited by Tom Homer, EMEA managing director at Telstra Enterprise, during a panel session at a Total Telecom Breakfast Briefing about Asia’s digital transformation.
Telstra found a route to the Chinese mainland in 2015, with the $697 million acquisition of Pacnet. The deal included Pacnet’s stake in Chinese joint venture Pacnet Business Solutions (PBS), which has a licence to operate IPVPN and data centre services in the country.
PBS was one of the reasons Telstra acquired Pacnet, Homer said on Wednesday.
"We now have 28 PoPs in China, a few hundred employees, network infrastructure, and, most importantly, a licence to operate," he said. "So we’re now a full-service telecoms operator, network operator, and data centre operator in China, which is a great advantage to have."
In November 2016, Telstra published its first Asian Digital Transformation Index. Compiled by the Economist Intelligence Unit, it scores 11 economies in terms of their progress on digital transformation. The scores are derived from three key themes: the availability or otherwise of digital infrastructure; a skilled workforce and digital participation by citizens; and the prevalence of digital ecosystems.
Singapore tops the table with a score of 75.6, ahead of South Korea and Japan, which score 72.5 and 70.7 respectively. China sits seventh with a score of 33.9.
Appearing in the bottom half of the ranking means China has considerable upside potential.
According to Accenture, digital technologies have the potential to boost China’s GDP by 3.7%, or $527 billion, by 2020. By comparison, the U.S. can expect digital to grow its GDP by 2.1%, or $421 billion.
A survey published by CA Technologies this March suggests that China’s digital transformation is now underway. According to the software giant, 91% of mainland China respondents have adopted DevOps, and 88% use agile working methods. However, only 33% of them currently use digitisation tools, such as optical character recognition (OCR) and natural language processing (NLP), for example.
However, while there is considerable potential in China’s digital transformation, the size of opportunity for foreign telcos could be somewhat limited given the closed nature of the market, even for a player like Telstra that has PBS.
"We’ll be an enabler of the digital transformation in China," Homer said. "I don’t think we’ll be much more than an infrastructure provider; I think we’re more about helping businesses outside China do business in China.
"I think that’s where we’re at, probably for the next few years."