& 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 SpA (NYSE: TI). 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.
From The Founder
Either we perform a complete 'factory reset' on the way the telecom industry creates and deploys virtualization, or we face the consequences.
Flash Poll
Live Streaming Video
Charting the CSP's Future
Six different communications service providers join to debate their visions of the future CSP, following a landmark presentation from AT&T on its massive virtualization efforts and a look back on where the telecom industry has been and where it's going from two industry veterans.
Women in Comms Introduction Videos
How Diversity Helps Comcast Mirror Its Customer Base

4|26|17   |   2:55   |   (0) comments


Diversity brings innovation, creative ideas and a way to reflect the broad spectrum of your customer base, Comcast Director of Customer Experience Jenelle Champlin says.
LRTV Huawei Video Resource Center
Mobile Operators & Video

4|25|17   |     |   (0) comments


Ovum's Ed Barton discusses the latest mobile operator strategies for mobile video.
LRTV Custom TV
Infinera Introduces Instant Network

4|20|17   |     |   (1) comment


Mike Capuano, vice president of marketing at Infinera, discusses the advancement from Instant Bandwidth to new Instant Network capabilities, which include Bandwidth License Pools, Moveable Licenses and Automated Capacity Engineering (ACE).
Women in Comms Introduction Videos
Vodafone's Eubank on Sponsors, Mentors & Moving On Up

4|19|17   |   4:25   |   (0) comments


Vodafone America's Head of Operations Kimberly Eubank breaks down the difference between a sponsor and a mentor and shares why both made a big difference in her career.
LRTV Custom TV
NYC Auto Show: Are We Smart Yet?

4|18|17   |     |   (0) comments


The auto industry is facing some big transformations as electric vehicles, autonomous technology and connected cars are seen as the future of the industry. During the much-anticipated NY international auto show, there was an emergence of new technology and mobility service on the show floor. Aside from performance, brands like Lincoln, Hyundai, Honda, Mercedes and ...
LRTV Huawei Video Resource Center
The Impact of Video

4|18|17   |     |   (0) comments


David Mercer from Strategy Analytics discusses the impact of video on current strategies.
LRTV Custom TV
Pardeep Kohli Discusses Network Transformation & the Market Opportunity for the 'New' Mavenir Systems

4|13|17   |     |   (0) comments


In a brief discussion at MWC 2017, Heavy Reading analyst Adi Kishore talks to Pardeep Kohli, CEO, Mavenir Systems about the creation of the 'new Mavenir' and some of the key challenges facing operators in today's market. A key theme of the discussion centers around operator need for software-only, virtualized solutions and how they will need to adapt to ...
Women in Comms Introduction Videos
Tech Maverick Shares Her Tips for Gender Inclusivity

4|12|17   |   7:28   |   (0) comments


Wendy Hall Bohling, a corporate escapee, author and gender exclusivity consultant, tells her story of sexism, bias and progress along the road to gender equality in the workforce.
LRTV Huawei Video Resource Center
Huawei at MWC 2017

4|11|17   |     |   (0) comments


At Mobile World Congress 2017, the biggest mobile industry gathering of the year, Huawei showcased its new innovations and solutions with the theme "Open Road," which focuses on cloud, 5G, operation transformation, videos and consumer-oriented products. Its campaign has been recognized by three awards given by GSMA.
LRTV Custom TV
China Telecom NFV Infrastructure on RSD

4|6|17   |     |   (0) comments


Lynn Comp, senior director of market development of Intel, is joined by Chong Zhang, storage engineer at Inspur and Ou Li Yan, architect for technology strategies of China Telecom, for a discussion of what NFV brings.
LRTV Custom TV
Nokia's IMPACT Software Demo

4|6|17   |     |   (0) comments


Khamis Abulgubein of IoT market development at Nokia demonstrates IMPACT (intelligent management platform for all connected things), a software solution with a horizontal approach to managing any device on any application.
LRTV Custom TV
Nokia Introduces Virtual Service Router for More Rapid Service

4|6|17   |     |   (0) comments


James Cumming, product line manager for virtualized service routers at Nokia, demonstrates how the virtual router based off the Nokia ecosystem changes the network function experience.
Upcoming Live Events
May 15-17, 2017, Austin Convention Center, Austin, TX
May 15, 2017, Brazos Hall - Austin, TX
May 15, 2017, Austin Convention Center - Austin, TX
June 6, 2017, The Joule Hotel, Dallas, TX
All Upcoming Live Events
Infographics
With the mobile ecosystem becoming increasingly vulnerable to security threats, AdaptiveMobile has laid out some of the key considerations for the wireless community.
Hot Topics
Time for a Telecom Reboot
Steve Saunders, CEO and founder, Light Reading, 4/19/2017
Surprise! AT&T Markets 4G Advances as '5G Evolution'
Dan Jones, Mobile Editor, 4/25/2017
Did Verizon Outbid AT&T for Straight Path?
Dan Jones, Mobile Editor, 4/25/2017
First Year TIPs the Scale Toward Success
Denise Culver, 4/24/2017
Unlicensed: It's What's Next for US Mobile Operators
Dan Jones, Mobile Editor, 4/19/2017
Like Us on Facebook
Twitter Feed
BETWEEN THE CEOs - Executive Interviews
One of the nice bits of my job (other than the teeny tiny salary, obviously) is that I get to pick and choose who I interview for this slot on the Light Reading home ...
TEOCO Founder and CEO Atul Jain talks to Light Reading Founder and CEO Steve Saunders about the challenges around cost control and service monetization in the mobile and IoT sectors.
Live Digital Audio

Playing it safe can only get you so far. Sometimes the biggest bets have the biggest payouts, and that is true in your career as well. For this radio show, Caroline Chan, general manager of the 5G Infrastructure Division of the Network Platform Group at Intel, will share her own personal story of how she successfully took big bets to build a successful career, as well as offer advice on how you can do the same. We’ll cover everything from how to overcome fear and manage risk, how to be prepared for where technology is going in the future and how to structure your career in a way to ensure you keep progressing. Chan, a seasoned telecom veteran and effective risk taker herself, will also leave plenty of time to answer all your questions live on the air.