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Chinese Operators Form Tower JV

Robert Clark
News Analysis
Robert Clark
7/11/2014
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In a move that could save them billions of dollars in capital and operating costs each year, China's three state-owned operators have formed a joint venture to own and manage their mobile towers.

China Mobile Ltd. (NYSE: CHL) will own 40% of the China Communications Facilities Services Co. Ltd, the company said in a statement to the Hong Kong Stock Exchange today. China Unicom Ltd. (NYSE: CHU) will own a 30.1% stake and China Telecom Corp. Ltd. (NYSE: CHA) the remaining 29.9%.

The company will be responsible for the "construction, maintenance and operation" of telecom towers plus "ancillary facilities including base station control rooms, power supplies and air conditioning as well as interior distribution systems." It will also manage the "provision of outsourced services of base station equipment maintenance."

The formation of such a venture was first outlined in May. (See China Operators Mull Tower Spin-off.)

The new company will have paid-in capital of 10 billion Yuan Renminbi (US$1.6 billion). However, China Mobile said discussions on which assets would be held by the new entity were still at "a preliminary stage," so it's currently unknown how many towers might be built and managed by the new venture.

Whatever assets are built and managed by the new venture, though, it's clear that it will reduce the total cost of ownership (TCO) of the operators' mobile networks as all three invest heavily in their 4G LTE infrastructure and services. (See China Issues 4G TDD Licences, China Issues More 4G Licenses, China Unicom Calls 4G Tender and China Mobile's Capex Blowout.)

— Robert Clark, contributing editor, special to Light Reading

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SachinEE
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SachinEE,
User Rank: Light Sabre
7/29/2014 | 6:54:36 AM
Re: Sweet deal?
For China Mobile, this sounds like a very sweet deal considering that they will definitely have practical control of the entire venture. Am not so sure about the other mobile operators entering the venture though and, given the Chinese government's hands on involvement in the IT industry it may be safe to say that beyond the money they will save on infrastructural expenditure they will not gain much else. Lets hope that the savings made by all the players in the venture will trickle down to the Chinese consumers as well sooner rather than later.
nasimson
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nasimson,
User Rank: Light Sabre
7/12/2014 | 9:44:30 AM
Too big. Too late
I am actually a little surprised to see this happening in mainland in 2014. Such a model is operational in India since last seven years, if I am recalling it correctly. I saw a speaker talking about it during annual Common Wealth Telecom organisation in New Delhi in 2008
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