China operator profits march on despite tariff cuts - Mobile World Live

China operator profits march on despite tariff cuts

25 MAR 2019

China’s mobile operators posted remarkably robust results in 2018, given the government pushed to aggressively reduce mobile data tariffs, with all three reporting year-on-year increases in profits, analysis by Mobile World Live showed.

Both China Unicom and China Telecom recorded solid profit growth (see chart below, click to enlarge), while market leader China Mobile registered a 3 per cent gain.

Mobile ARPU continued a downward trajectory, slipping by between 8 per cent and 16 per cent from 2017.

The Ministry of Industry and Information Technology (MIIT) reported the government’s policy to increase internet speeds and cut costs reaped big dividends in 2018: the average price of 1GB was less than CNY10 ($1.49) and the comprehensive telecoms price index fell 56.7 per cent year-on-year.

LTE penetration in the country rose from 71 per cent in 2017 to 76 per cent at end-December 2018, as the operators added a collective 168 million 4G connections.

Despite a combined mobile subscriber base of 1.42 billion at end-2017, the three managed to add another 121 million new subs. China Telecom posted the biggest gain, boosting mobile connections by 21 per cent (53 million).

No 5G update
None of the operators shared any insight on when they will actually launch 5G services. In December 2018 all three were awarded spectrum in the 3.5GHz band to conduct nationwide network trials. But the government is yet to issue the required licences for them to start commercial services.

An MIIT representative said recently it had set a number of priorities to speed the commercialisation of 5G, but didn’t offer a detailed timetable on the rollout.

China Telecom COO Ke Ruiwen said it is taking a “market-oriented and demand-driven approach”. He added it will appropriately manage the development of non-standalone and standalone concurrently, and progressively expand the scale of network trials, which cover 17 cities and involve more than 1,000 5G base stations.

Yang Jie, who took over as chairman of China Mobile earlier this month, said it will continue to conduct 5G network tests and perform trials on business applications to ensure the pre-commercial launch of 5G services this year, while China Unicom chairman and CEO Wang Xiaochu said it is actively promoting 5G network and industry application trials in key cities, and plans to expand the scale of tests based on the results achieved and maturity of equipment.

Falling capex
China Unicom was the only operator to increase capex in 2018, which rose slightly to CNY44.9 billion. It installed 140,000 4G base stations to take the total to nearly 1 million.

Capex at China Mobile fell 5.9 per cent year-on-year to CNY167 billion and is forecast to dip to CNY150 billion this year, but that doesn’t include an undisclosed allocation for its 5G plan. The operator ended 2018 with 2.4 million 4G base stations.

China Telecom’s capex declined 15.5 per cent to CNY74.9 billion. With a projected CNY9 billion investment in 5G, 2019 capex is forecast to rise to CNY78 billion. After adding 210,000 base stations, it closed the year with 1.38 million.

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Joseph Waring

Joseph Waring joins Mobile World Live as the Asia editor for its new Asia channel. Before joining the GSMA, Joseph was group editor for Telecom Asia for more than ten years. In addition to writing features, news and blogs, he...

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