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China Mobile to Unleash 3G Next Year

The cracks in China's 3G dam are really showing now as China Mobile Communications Corp. preps a large-scale launch of the country's own TD-SCDMA technology by the end of June next year.

The news comes as the world's largest mobile operator, by subscriber numbers, reported staggering interim results for 2008. (See China Mobile Reports 2008 Interims.)

China Mobile's chairman and CEO Wang Jianzhou said yesterday that the operator plans to roll out its TD-SCDMA network to a further 28 cities. The operator has already invested 15 billion Chinese Yuan (US$2.2 billion) to cover 10 cities with 3G. China Mobile said it planned to launch in those 38 cities by the end of June next year. (See China Mobile Wants More 3G Phones and China to Get 3G – At Last!)

China Mobile is the last of the three big and newly revamped operators in China to outline its 3G plans. But the mobile operator's plans did not come with eye-watering capex figures attached to them like China Unicom Ltd. (NYSE: CHU)'s or China Telecom Corp. Ltd. (NYSE: CHA)'s announcements did with their combined $26.3 billion investment plans for their GSM and CDMA network expansions, respectively, and 3G buildout. (See Unicom Plans Capex Blowout and China Begins $70B Carrier Revamp.)

China Mobile said it will increase its capex spend this year by less than $1.5 billion, which is less than 8 percent of the 127.2 billion Chinese Yuan ($18 billion) budgeted for 2008, but said this was due to "post-disaster reconstruction and business development." The catastrophic Sichuan earthquake hit China Mobile by wiping out 4,457 base stations. (See Quake Hits China's Networks.)

China Mobile's capex spend for the first half of this year was 65.5 billion Chinese Yuan ($9.6 billion), which is 33.3 percent of the operator's first half revenues of 196.5 billion Chinese Yuan ($29 billion), and was mostly spent on building out the GSM network, business system support, transmission facilities, and infrastructure buildings.

Competition among the equipment vendors is really heating up in China now that the operators have finally started their restructuring and 3G licenses are on the horizon. Nokia Networks has already bagged a mobile infrastructure deal worth €550 million ($807 million), while Alcatel-Lucent (NYSE: ALU) recently signed a framework agreement with the operator for mobile network upgrades worth $1 billion. These contracts are surely just the beginning as the operator ramps up its TD-SCDMA network next year. (See AlcaLu Upgrades China Mobile and Mobile Coup for NSN.)

Strong interim results
China Mobile's revenue was up 17.9 percent year-on-year to 196.5 billion Chinese Yuan ($29 billion) in the first half of this year. And the operator's "profit attributable to shareholders" surged up 44.7 percent to 54.8 billion Chinese Yuan ($8 billion) compared with the same period last year.

China Mobile now boasts 415 million customers, making it the world's largest operator by a long shot. Average revenue per user (ARPU) for the period was 84 Chinese Yuan ($12.3) per month. (See China Mobile by Numbers and Mobile Booms in China .)

The operator is also gaining momentum with mobile content services. China Mobile boasts 81 million subscribers to its wireless music club, and a "Mobile Paper" news and information service has more than 40 million subscribers. The operator claims its Fetion service is the third-largest instant messaging service in the country with 112 million subscribers.

— Michelle Donegan, European Editor, Unstrung

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