& cplSiteName &

China's Telcos Eye Life After 4G

Iain Morris
4/21/2017
50%
50%

At this rate, it will not be long before China Mobile's biggest problem is the shortage of customers not using 4G services.

Yet again, the Chinese mobile giant has reported a jaw-dropping number of new 4G customers in a single quarter -- in this case, the first three months of 2017. About 33 million subscribers joined the operator's 4G service over that period. That's like converting the entire population of Peru to the higher-speed mobile technology.

And most of the operator's 4G customers have, indeed, been converted from 2G and 3G services. Overall mobile customer numbers rose by just 7.6 million -- not even the population of Switzerland -- to give China Mobile Ltd. (NYSE: CHL) about 856 million in total. Two thirds are now using 4G.

This is paying off handsomely for China Mobile on the financial front. Revenues were up 3.7%, to 184 billion Chinese yuan ($26.7 billion), compared with the year-earlier quarter. Profit attributable to equity shareholders rose by the same amount, to RMB24.8 billion ($3.6 billion).

It is also happening despite the 4G challenge from smaller rivals China Unicom Ltd. (NYSE: CHU) and China Telecom Corp. Ltd. (NYSE: CHA), which have not been able to subdue China Mobile despite their best efforts.

China Unicom, which reported its own first-quarter results earlier today, managed about 18 million 4G customer additions in the first three months of the year, giving it nearly 123 million in total (about 46% of its mobile customer base).

Yet to report first-quarter figures, China Telecom picked up nearly 10 million 4G customers in January and February, leaving it with nearly 132 million altogether (or 60% of its mobile customer base).

These rates of growth are impressive by any ordinary measure. Yet all three operators are selling the bulk of new 4G subscriptions to existing subscribers. That gives China Mobile a massive advantage that its rivals can do little about.

On a universally positive note, all three companies are enjoying growth even as they reduce their capital expenditure. With 4G networks rolled out fairly extensively in the country, operators can afford to sit back and reap the rewards of earlier investment activity. (See Chinese Telco Capex to Fall 13% This Year.)

But they cannot exactly rest on their 4G laurels. As China Mobile's figures show, the time is approaching when there will be relatively few customers left to convert to 4G. And as services are "upsold" to late entrants and lower-income segments of the market, operators may need to cut prices.


Want to know more about 4G LTE? Check out our dedicated 4G LTE content channel
here on Light Reading.


That's why terms like "cloud," "enterprise" and "IoT" are showing up more frequently in the Chinese operators' earnings reports. Just like operators in much smaller and more developed Western markets, China Mobile and its competitors are looking outside their traditional consumer markets at a range of new business opportunities.

They might be under less immediate pressure than, say, a Telefónica or Telecom Italia (TIM) . But their involvement in initiatives such as ONAP arguably puts them at the very forefront of the operator community in some key areas. They certainly cannot be accused of complacency. (See ONAP Makes Splashy ONS Debut.)

"The group is at a critical stage of transformation of its development," said China Mobile in its latest earnings release, flagging "the expansion of the corporate customer market as well as the deployment of emerging business" as critical factors.

At industry events, both China Mobile and China Telecom can increasingly be heard discussing their involvement in smart city initiatives, or efforts to pioneer the rollout of new IoT services.

None of this means China's operators will be able to carry their 4G successes into new markets. And right now those markets account for a small share of revenues.

But as 4G growth tapers off, they will become even bigger priorities. With their enormous scale, government backing and the still-growing Chinese economy, China's telcos have advantages and opportunities that operators elsewhere do not.

For the last couple of years, China's telecom market has been all about high-speed mobile services for consumers. In the next couple, that may quite dramatically change.

— Iain Morris, Circle me on Google+ Follow me on TwitterVisit my LinkedIn profile, News Editor, Light Reading

(1)  | 
Comment  | 
Print  | 
Newest First  |  Oldest First  |  Threaded View        ADD A COMMENT
Bacassa
50%
50%
Bacassa,
User Rank: Light Beer
4/23/2017 | 8:39:52 AM
Great
China is an absolute leader for me. Great strategy.
Featured Video
From The Founder
The world of virtualization is struggling to wrench itself away from the claws of vendor lock-in, which runs counter to everything that NFV stands for.
Flash Poll
Upcoming Live Events
March 20-22, 2018, Denver Marriott Tech Center
March 22, 2018, Denver, Colorado | Denver Marriott Tech Center
March 28, 2018, Kansas City Convention Center
April 4, 2018, The Westin Dallas Downtown, Dallas
April 9, 2018, Las Vegas Convention Center
May 14-16, 2018, Austin Convention Center
May 14, 2018, Brazos Hall, Austin, Texas
September 24-26, 2018, Westin Westminster, Denver
October 9, 2018, The Westin Times Square, New York
October 23, 2018, Georgia World Congress Centre, Atlanta, GA
November 8, 2018, The Montcalm by Marble Arch, London
November 15, 2018, The Westin Times Square, New York
December 4-6, 2018, Lisbon, Portugal
All Upcoming Live Events
Hot Topics
Has Europe Switched to a Fiber Diet? Not Yet...
Ray Le Maistre, Editor-in-Chief, 2/15/2018
Will China React to Latest US Huawei, ZTE Slapdown?
Ray Le Maistre, Editor-in-Chief, 2/16/2018
IBM, Microsoft Duke It Out Over Chief Diversity Hire
Sarah Thomas, Director, Women in Comms, 2/15/2018
5G: The Density Question
Dan Jones, Mobile Editor, 2/15/2018
T-Mobile Injects AI Into Customer Service
Kelsey Kusterer Ziser, Editor, 2/16/2018
Animals with Phones
Live Digital Audio

A CSP's digital transformation involves so much more than technology. Crucial – and often most challenging – is the cultural transformation that goes along with it. As Sigma's Chief Technology Officer, Catherine Michel has extensive experience with technology as she leads the company's entire product portfolio and strategy. But she's also no stranger to merging technology and culture, having taken a company — Tribold — from inception to acquisition (by Sigma in 2013), and she continues to advise service providers on how to drive their own transformations. This impressive female leader and vocal advocate for other women in the industry will join Women in Comms for a live radio show to discuss all things digital transformation, including the cultural transformation that goes along with it.

Like Us on Facebook
Twitter Feed