China’s big three mobile operators added an impressive 139 million 4G connections in the first half of this year, after registering 101 million connections in the first year of full 4G commercialisation in 2014. But this headline number hides differing levels of success for the country’s LTE players.
China now has more than 240 million 4G connections. To put that in perspective, global 4G connections hit 635 million in Q1, according to ABI Research.
Market leader China Mobile continued to dominate 4G additions, adding nearly 100 million new connections in H1, giving it a total of 189.6 million 4G connections and a 79 per cent share of that segment.
Since being granted preferred FDD-LTE licences in February, number two and three mobile operators — China Unicom and China Telecom — have started to cut into China Mobile’s huge lead (it had 89 per cent of the 4G connection base in Q4). However, their gains have been modest.
China Telecom added 22 million 4G connections in the first six months of the year, taking its total to 29 million, while China Unicom now has 21.6 million, after picking up 17.5 million connections in H1, according to the latest figures from GSMA Intelligence.
Unlike its rivals, Unicom recently stopped breaking out 4G user numbers in its financial results, instead combining 3G/4G technology in a single figure (suggesting that its 4G progress is not as great as it would hope). Indeed, the timing of the reporting change coincides with the country’s second largest player losing 9.87 million total mobile connections in the first six months of the year. And its user base fell again in July, down almost 900,000 to 289.3 million.
Unicom’s stumble is similar to one faced a year ago by Telecom, which saw a net loss of 5.55 million connections between January and July, which it managed to turn around in the second half of 2014.
With China Mobile enjoying its first-mover advantage in 4G for more than a year, the other two face the huge task of trying to catch up with an operator with 940,000 4G base stations and 817 million mobile connections (half of which are 2G).
Telecom is boosting capex 40 per cent for the full year, with mobile capex accounting for 50 per cent of the total in H1. It deployed 330,000 4G base stations this year, taking its total to 510,000. Unicom plans to increase capex for mobile networks 35 per cent this year, adding 272,000 4G base stations in H1. Its target for 2015 is 1.2 million mobile broadband base stations.
Both are expected to speed up their 4G network rollouts by leveraging the national tower company, which started to take over the construction of towers from the operators last December, and is expected to build more than one million towers in the next two years.
China Mobile, with its 4G network almost completed, plans to reduce capex 7 per cent this year and will likely cut it further next year, Moody’s reported. But it still managed to add 190,000 4G base stations in H1.
Despite its rivals’ expanded coverage, China Mobile accounted for almost 75 per cent of new 4G additions over the past two quarters, according to GSMA Intelligence. 4G connections now represent 23 per cent of its user base. Just 12 per cent of China Telecom’s 191 million connections are 4G.
ABI Research predicts that by the end of the year China will have 500 million 4G connections, which will represent 37 per cent of the research firm’s global forecast of 1.36 billion.
China Mobile has said it expects to have 300 million 4G connections by the end of the year – giving it a 22 per cent share of the global 4G market.
Notwithstanding their increased capex and opportunity to accelerate their rollouts by network sharing, Telecom and Unicom aren’t likely to significantly impact the leader’s 4G market share anytime soon.
But then sharing just a fraction of a 1.3 billion-connection market isn’t a bad business to be in; Unicom’s H1 net profit rose 4.5 per cent to CNY6.99 billion ($1.09 billion) – it was the only China operator to report profit growth.
The editorial views expressed in this article are solely those of the author and will not necessarily reflect the views of the GSMA, its Members or Associate Members.