The three major mobile players in China faced slowing 5G subscriber growth in 2022, but registered growing traction in the lucrative industrial sector, with gains in revenue from deploying private networks for enterprises.

China Mobile’s agreements for commercial 5G projects across multiple sectors reached 18,000 with the value of the contracts totalling CNY36.5 billion ($5.3 billion).

Revenue from dedicated 5G networks more than doubled year-on-year to CNY2.6 billion.

In its earnings release, the operator stated uptake of 5G services, mobile cloud, digital content, smart home and related businesses fuelled 30.3 per cent growth in what it calls digital transformation revenue to CNY207.6 billion, accounting for a quarter of total telecoms service revenue.

China Telecom’s industrial service revenue, previously referred to as its industrial internet business, increased 19.7 per cent to CNY117.8 billion. It added 8,000 commercial private 5G projects, taking the total to about 15,000.

Industry internet revenue for China Unicom grew 28.6 per cent to CNY70.5 billion, accounting for 22.1 per cent of service revenue compared with 18.5 per cent in 2021.

The company said it installed network equipment at 1,600 5G-connected factories and is working on a total of more than 5,000 5G industrial internet projects, with private network contracts valued at CNY3.1 billion.

Consumer segment
The operators added a combined 365 million new 5G package subscribers in 2022, down from 400 million in 2021, taking penetration in China to nearly 65 per cent.

Only China Telecom disclosed mobile service revenue, which rose 3.7 per cent to CNY191 billion.

China Mobile and China Unicom provided the broader telecoms services figure, up 8.1 per cent to CNY812.1 billion and 7.8 per cent to CNY319.3 billion, respectively.

Mobile ARPU was flat for all three in 2022 (see table above, click to enlarge).

Since end-2020, ARPU rose 3.4 per cent to CNY49.00 for China Mobile, 5.2 per cent to CNY45.20 for China Telecom and 5.3 per cent to CNY44.30 for China Unicom.

The anaemic growth in ARPU and mobile service sales over the last two years leaves them little choice but to seek new growth avenues.

Capex priorities
China Telecom plans to boost capex this year by 7 per cent to CNY99 billion, with a focus on industrial digitalisation, which will account for 38 per cent of the outlay compared with 29 per cent in 2022.

China Unicom earmarked CNY76.9 billion for capex in 2023, up from CNY74.2 billion in 2022, but noted a downward trend as a percentage of revenue.

It expects spending on computing network resources to grow 19.4 per cent to CNY14.9 billion.

China Mobile forecast capex to dip marginally to CNY183.2 billion in 2023, with spending on 5G-related equipment to decline to CNY83 billion from CNY96 billion in 2022.

It targets adding 260,000 5G base stations, for a total of 1.6 million sites.

To beef up its enterprise offering, it allocated CNY45.1 billion on computing resources compared with CNY33.5 billion in 2022.

With the operators generating a combined profit of nearly CNY170 billion in 2022 they can certainly afford to invest heavily in the B2B segment, which analysts have long forecast to be the most attractive driver of 5G revenue in future.