Reports surfaced over the past weekend that China Telecom Corporation Ltd. —China’s third largest wireless operator (100 million subscribers) and one of its largest landline operators (172 million access lines in service) — wants to lease network capacity in the UK to sell mobile services as a Mobile Virtual Network Operator (MVNO). Multiple sources say the company has approached Everything Everywhere, a joint venture between Deutsche Telekom AG (News - Alert) and France Telecom SA, and the Vodafone Group Plc., to be the underlying network wholesalers.

The short-term goal is grabbing a share of the lucrative tourist population for the London Olympics in 2012. According to VisitBritain, the UK government’s tourism agency, the fastest increase in tourism to the UK from any country has been from China and expectations are there will be a further 89 percent increase in Chinese tourism to the UK by 2014. The substantial and growing population of Chinese-speaking residents of the UK are also targets of opportunity.

While the short-term move is tactical, in the context of China Telecom’s (News - Alert) view of its long-term sustainability, as revealed in its result quarterly financials there is much more at work here. In fact, TMCnet Contributing Editor Gary Kim (News - Alert) had an interesting article last week that highlighted the global search by facilities-based carriers to urgently find new sources of revenue.  Under the title, “Planning ahead and fully preparing for the future,” China Telecom stated the following:

From the overall perspective of the development in global communications industry, the multidimensional, multi-crossing, comprehensive restructuring and convergence of key industry players has become an inevitable trend, whereas the player with competitive edges in mobile Internet will be the future leader.

This observation came following a section in the filings that discussed the financial mitigation of the continuing trend of lost wireline access lines and voice revenues being made up by an increase in data services and the investment the company is making in Cloud computing as well as wireless services inside China as customers move to 3G and smartphone and tablet sales accelerate.

What is revealing about the MVNO entry into the UK is not just the decision expand its reach in the context of its view of value creation in the future, but also the speculation that the UK experience will go a long way toward determining if expansion into Germany and France will be next.

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Peter Bernstein is a technology industry veteran, having worked in multiple capacities with several of the industry's biggest brands, including Avaya, Alcatel-Lucent, Telcordia, HP, Siemens (News - Alert), Nortel, France Telecom, and others, and having served on the Advisory Boards of 15 technology startups. To read more of Peter's work, please visit his columnist page.