July 24, 2019
China's decision to accelerate its 5G timetable has put state-owned cellsite owner China Tower into the driver's seat of the world's biggest and fastest rollout.
Formed five years ago out of the site assets of the three state-owned operators, China Tower is the world's biggest mobile tower company.
It went public last August in the world's tenth-largest IPO ever, raising $7.5 billion on the Hong Kong Stock Exchange.
Its core business of providing shared sites and cabinets for basestation deployment has become the industry norm, with the proportion of shared cell sites increasing from 14% to 75% since 2014.
Now the company has the job of provisioning China's ambitious 5G deployment.
The government issued four 5G licences in early June, at least six months ahead of schedule.
Industry leader China Mobile says it plans to go live with 50,000 cell sites in 50 cities before the year's end.
Rivals China Telecom and China Unicom expect to launch by mid-2020, targeting 40 and 33 cities respectively.
China Tower has some hefty inventory to draw upon in support of the rollout.
In addition to the 1.9 million sites currently hosting basestations, it has 9 million light poles, 3.5 million power poles, 330,000 buildings and other assets.
In recent weeks, there has been a little buzz around the China Tower stock.
Nomura and other securities firms have put buys on it, citing the 5G rollout, the exponential demand for small cell sites and the company's near-monopoly.
Not every analyst agrees -- JP Morgan thinks investors are overly optimistic and the stock is already generously priced. But that's because stock is up 65% since the IPO, giving it a market capitalization of $47 billion.
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The underlying financial performance is solid.
It used nearly a third of the IPO funds to reduce debt. In its first set of full-year results since going public, it posted net earnings of 2.65 billion yuan ($390 million) on revenues of RMB71.8 billion ($10.5 billion), up 4.6% on the year-earlier figure.
Operationally, it has a good track record after enabling the rapid 4G rollout, doubling the number of sites used by operators while also increasing the site utilization rate.
For the current 5G campaign, it has also won the crucial support of provincial governments.
Virtually every provincial government has chosen China Tower to coordinate 5G deployment because of its ability to ensure a fast rollout.
Beyond its basic cell site business, the company is building new segments in selling distributed antenna systems (DAS) and in offering its capabilities and assets to other industries such as power and satellite.
— Robert Clark, contributing editor, special to Light Reading
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