We’ve written plenty about how growing consumer caution is taking a toll on China’s retailers, sending many into revenue contraction and the loss column. Now, we can say the same looks true for telecoms services, based on a profit warning last Friday from AsiaInfo Technologies Ltd. (1675.HK), one of China’s oldest private providers of telecommunications software.
The warning extends a recent deterioration of the company’s business into the first half of this year, as it slipped into the red for the first time since it relisted in Hong Kong in 2018. AsiaInfo was a pioneer in China’s telecoms sector when it made a U.S. IPO in 2000, and was generally profitable through its 14 years as a New York-listed company before it privatized in 2014.
Thus, the fall into the red in the first half of 2024 represents a dubious milestone for this telecoms veteran, which for years profited on business from the rapid rise of China’s three main telcos, China Mobile, China Unicom and China Telecom. The negative milestone was hardly unexpected, since AsiaInfo’s business began deteriorating last year as its three main customers began to rein in their spending.