China Mobile could be on the hook for as much as $15 billion for the construction of the new national 700MHz network.
The giant telco's partnership with newcomer China Broadcast Network (CBN) has never been thought to have been one of equals. But it has now revealed it will foot the entire bill for the construction of the greenfield 5G network.
That's a departure from the original agreement, inked in January, in which both parties agreed to jointly invest at a 1:1 ratio.
In a "supplemental agreement" announced on September 10, Hong Kong-listed China Mobile Ltd said its fully state-owned parent, China Mobile Communications Group, will "initially bear all construction costs" and own all the network assets. CBN will pay network access fees based on agreed commercial terms.
"CBN under appropriate conditions may purchase 50% of the 700MHz equipment and assets such as wireless base stations and antennas... at the then assessed market fair value," the statement added.
China Mobile, which already has more than 500,000 basestations on its main 2.6 Ghz network, is planning to roll out 700MHz at a similar scale.
It aims to build 200,000 700MHz basestations this year, an unnamed executive told China Business Daily With CBN it jointly announced procurement contracts for approximately 480,000 base stations in July.
Based on an estimated cost of around 200,000 yuan ($30,298) per 5G basestation, the bill for China Mobile's second 5G network could be around 96 billion yuan ($14.9 billion), media industry analyst Wu Chunyong has calculated. That is in the ballpark of a single year's spending by China Mobile on 5G, based on its recent numbers.
The telco invested 50.2 billion yuan on 5G in the first half of 2021, with a forecast full-year total of 110 billion. It spent 102.5 billion yuan in 2020 and 24.0 billion yuan in 2019.
Under the January agreement, China Mobile will resell 5G capacity and supply network management and backhaul to CBN.
It will also provide commercial access to its 2G and 4G networks.
CBN, a new national operator created out of provincial level cable TV providers, was granted 700MHz spectrum in April 2020 as part of a plan to increase telecom competition and provide digital opportunities for the embattled cable sector.
Despite investments from Alibaba and utility giant State Grid, it is still capitalized at 101 billion yuan ($15.6 billion). By comparison, China Mobile's current market cap is $124 billion.
- CBN issues massive 5G basestation tender
- China Mobile, CBN set out 5G partnership terms
- China releases 700MHz for 5G
— Robert Clark, contributing editor, special to Light Reading