Ahead of 5G rollout, China Tower nearly doubles profit

Tasked with deploying much of the infrastructure that will underpin China's 5G services, China Tower keeps rising.

The company, which literally makes and maintains the towers that support mobile network equipment, already manages hundreds of thousands of sites, and its portfolio is growing as China prioritizes investment in mobile technologies, including the new 5G standard.

That means lots of extra business for China Tower, which today reported a near doubling in net income last year, to 5.2 billion Chinese yuan ($740 million).

Sales rose at the more modest rate of 6.4%, to RMB76.4 billion ($10.9 billion), but efficiency measures, accounting changes and a sharp fall in finance costs all boosted the bottom line.

As the financial documents published this week show, the footprint makes tower firms in other parts of the world look like toddlers: By the end of 2019, China Tower had a grand total of almost 2 million towers (1.994 million is the more exact figure it provides) throughout the country, having added another 69,000 during the year.

Its tenancy ratio was also up as different service providers relied on the same infrastructure when deploying equipment. More than 80% of new tenancy demands were satisfied through colocation, said the company in its earnings statement. The so-called "tenancy ratio," meaning the number of operators per site, rose from 1.55 at the end of 2018 to 1.62.

Originally set up in July 2014, China Tower is today a joint venture between China Mobile, China Telecom and China Unicom, the country's three big mobile service providers.

It gained new status in late 2015 when those companies pooled assets worth $34.5 billion in China Tower to support a more cost-efficient rollout of mobile broadband services.

In plans announced today, China Tower said it was working to acquire resources for new sites. It also aims to speed up its development of a centralized cloud platform for resource management.

Want to know more about 5G? Check out our dedicated 5G content channel here on Light Reading.

The update by the company came just days after Telecom and Unicom launched a joint tender for the supply of about 250,000 basestations, according to local news reports. China Mobile is reported to be seeking gear for the rollout of more than 232,000 basestations this year.

Sources at Chinese equipment vendor ZTE previously told Light Reading that China was on course for the deployment of between 500,000 and 600,000 5G basestations in 2020.

The bullish objective is of major concern to authorities in the US, which worry about falling behind China in the 5G market. US policymakers fear China may gain the upper hand in business productivity and lead the development of new digital technologies with a 5G head start.

However, there is now concern within the industry that supply constraints caused by the COVID-19 outbreak could hold up China's 5G plans.

China Tower's stock has fallen along with the overall market in recent weeks as a result of concern about COVID-19 and the impact of the disease on economic activity. Since 4 March, its share price has lost 16% of its value in Hong Kong.

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Iain Morris, International Editor, Light Reading

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