China Mobile, China Unicom and China Telecom renegotiated the terms of their tower rental agreements with China Tower to bring down their leasing costs, which have been rising sharply.
All three companies released statements detailing the new terms of five-year agreements, which cut the “markup margin rate”, the amount they are charged above overhead costs, from 15 per cent to 10 per cent, effective from 1 January 2018.
The discount the operators receive on the base price for co-tenancies will increase from 20 per cent to 30 per cent when two companies share a site and from 30 per cent to 40 per cent when all three operators share. The discount for the anchor tenant remains at 5 per cent. The new rates are in effect until 31 December 2022.
In July 2016 the operators inked separate deals with China Tower to lower rates for leasing towers, which were expected to lead to significant long-term cost savings. However, as they have rapidly expanded 4G network coverage across the country the companies complained rising tower leasing expenses pushed up their total operating expenses in 2017.
The state-run tower company was formed to reduce redundant construction of telecoms infrastructure, with the mobile operators transferring their tower assets worth an estimated $36 billion to China Tower in 2015.