China Unicom and China Telecom are facing a “subscriber growth crisis” as net additions slow and China Mobile continues to take the lion’s share of new 4G connections.
The Daily Economic News reported that Unicom had a net gain of 635,000 connections in August – the lowest this year and down from 888,000 additions the previous month. Q2 net additions fell to 5.3 million from more than eight million in the previous two quarters, according to GSMA Intelligence.
Telecom reported in its interim results a net loss of 5.35 million connections in H1. And after another net loss of 200,000 in July, it turned the slide around with 520,000 net additions in August.
Meanwhile, China Mobile had a net gain of 2.4 million mobile connections in August, the Daily Economic News said. In Q2 it added 9.5 million connections.
The market leader, with a 62 per cent share, has had a huge head start in 4G since the first licences issued in December were for TD-LTE. It now has an estimated 30 million 4G connections (up from 14 million in Q2), after adding 9.1 million in August. It had about 90 per cent of 4G connections at the end of June while Unicom had almost 8 per cent (1.1 million) and Telecom had just under 2 per cent (270,000). Q2 was the first quarter that Unicom and Telecom offered 4G services.
GSMA Intelligence forecasts Unicom to add 1.5 million 4G connections in Q3, Telecom to sign up one million and China Mobile to add almost 18 million after boosting its 4G numbers by 11 million in Q2.
Telecom and Unicom were late to the 4G scene as they waited until June for the first trial licences for FDD-LTE, which is more compatible with their existing 3G networks. And just last month they received approval to extend their hybrid network trials from 16 cities to a total of 40, covering an estimated population of 400 million to 500 million people.
Due to the limited scope of the original FDD-LTE licence, Telecom spent less than 30 per cent of its annual CAPEX budget in the first half of the year (CNY33 million compared to CNY33 billion a year ago). It reduced its earlier target of adding 140,000 4G base stations this year to 80,000. It rolled out only 26,000 4G base stations in H1.
China Unicom has plans to build out 100,000 4G base station in H2.
China Mobile’s wider coverage – it has 410,000 4G base stations in about 300 cities and aims to have half a million by the end of the year – and aggressive marketing to upgrade 3G users to its 4G services means its rivals will always be playing catch-up. With mobile penetration approaching 90 per cent in China, by the time they have the necessary 4G coverage the vast majority of the country’s aspiring 4G users will have already joined China Mobile.
The MIIT is expected to approve full commercial FDD-LTE licences early next year.
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