China Mobile Explores 5G Tie-Up With National Cable TV Operator

by Liu Yanfei and Yang Ge of Caixin Global

China Mobile Ltd., the world’s biggest wireless carrier by subscribers, said it is talking with a recently formed national cable TV operator about cooperation in upcoming 5G networks and services, as it looks for new income sources to jumpstart its stagnating revenue.

China Mobile controls about 60% of its massive home market, making it flush with cash for aggressive spending on a state-of-the-art 5G network that has become a recent top priority for Beijing. By comparison, China Broadcasting Network Corp. was formed only five years ago by cobbling together many of the nation’s regional cable TV operators, and is relatively cash poor.

China Mobile and its two peers, China Telecom Corp. Ltd. and China Unicom Telecommunication Corp. Ltd., all received 5G licenses when the regulator awarded them in June, a move that was widely expected. But many industry watchers were surprised when China Broadcasting also received a 5G license because the company is relatively cash-poor and also has little or no experience in wireless services.

China Mobile had previously made known its desire to work with China Broadcasting, even though Unicom and China Telecom opposed such a move. China Mobile Chairman Yang Jie told Caixin on Thursday that talks between the two sides have taken place on building and sharing 5G networks, but he added there is nothing to reveal just yet.

“Building and sharing 5G networks is something the nation also supports, and businesses are also quite willing,” he told Caixin on the sidelines of an event to discuss the company’s latest financial results, which were also released on Thursday.

China Mobile Chairman Yang Jie says Thursday in Hong Kong that his company and China Broadcasting have discussed building and sharing 5G networks. Photo: VCG

China Mobile Chairman Yang Jie says Thursday in Hong Kong that his company and China Broadcasting have discussed building and sharing 5G networks. Photo: VCG

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A collaboration with China Broadcasting would give China Mobile access to one of the country’s biggest providers of programming via the former’s vast cable network. Such a tie-up could help to reinvigorate China Mobile’s revenues, which have stagnated in recent years as demand for its core wireless voice and data services starts to mature.

On Thursday, China Mobile reported interim results that showed the company’s revenue dipped by 0.9% to 204.4 billion yuan ($29 billion) in this year’s second quarter, while its profit plunged 18.8% to 32.4 billion yuan, according to calculations by Caixin.

China Broadcasting was formed in 2014 by combining many of the country’s regional cable-TV operators. It was originally set up to run cable TV networks, but was granted a license to operate internet and telecom services in 2016.

Before issuing 5G licenses in June, China’s telecom regulator called a meeting with each of the three big carriers’ top officials in charge of network construction, a source close to the Ministry of Industry and Information Technology (MIIT) previously told Caixin. China Mobile raised its hopes of working together with China Broadcasting on that occasion, even though Unicom and China Telecom opposed.

As the nation’s dominant carrier, China Mobile is spending the most aggressively on 5G. Figures from the company indicate it now plans to spend about 24 billion yuan on the network this year. By comparison, Unicom has said it plans to spend 6 billion yuan to 8 billion yuan on 5G this year, while China Telecom has said it plans to spend about 9 billion yuan.

Contact reporter Yang Ge (geyang@caixin.com; twitter: @youngchinabiz)

Original article athttps://www.caixinglobal.com/2019-08-09/china-mobile-talks-5g-tie-up-with-national-cable-tv-operator-101449253.html

One thought on “China Mobile Explores 5G Tie-Up With National Cable TV Operator

  1. China Mobile’s first-half result was the first in a decade in which it recorded falls in both revenue and profit. Its stock is down 10% in the past month and 15% for the year.

    The tepid industry outlook is leading analysts to look harder at the factors weighing on Chinese telcos.

    One is the sheer scale of investment. Analyst firm CCID estimates the 5G rollout, with its huge small cell deployment, will cost up to three times as much as 4G, according to 21st Century Business Herald.

    The government telecom research arm, the China Academy of Information and Communications Technology, has estimated total 5G investment might reach RMB2.8 trillion ($411 billion) in the period from 2020 to 2030.

    Total industry capex last year was RMB287 billion ($40.8 billion), with 5G accounting for just a fraction of that amount.
    China now has the lowest mobile data rates of any major market of between 3 and 17 US dollar cents per month per GB. Adjusting for per capita income, that compares with rates of 24 cents in Japan and 22 cents in the US, according to figures from Jefferies.

    In addition, the operators, as state-owned entities, are easily roped into various government schemes. The three have spent more than RMB40 billion on running fiber and 4G to remote villages in the last three years in support of universal service projects.

    But Edison Lee, an equity research analyst at Jefferies, points out that the government and telcos may be held back by the US sanctions on Huawei.

    If those last, China may not be able to build 5G on as big a scale as it intends, he said.

    “That will mean more hope of lower capex for the Chinese telcos but will spell more downside risk for global communications tech supply chain.

    “This could significantly set back the 5G rollout timetable of China and also globally.”

    https://www.lightreading.com/mobile/5g/5g-too-big-even-for-china/d/d-id/753438?

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