China Mobile has 15.4 million 5G customers; 5G+ is primary focus area

China Mobile today published its 2019 annual financial report, stating that the company’s operating revenue reached CNY745.9 billion -a year-on-year increase of 1.2% – and its net profit was CNY106.6 billion ($15 billion) – a year-on-year decrease of 9.5%.

The fall in net profits was largely due to a spike in financing costs – up from RMB144 million ($20.2 million) to RMB3.25 billion ($460 million).

Operating revenue was just 1.2% higher, at RMB745.9 billion ($104.8 billion), while telecom services revenue improved by a meager 0.5%.

A few highlights:

  • The largest China telecom network provider acquired 15.4 million 5G customers in the first three months after launch.
  • In 2019, China Mobile’s mobile users increased by 25.21 million, reaching a total of 950 million. Its mobile Internet data traffic increased by 90.3% year-on-year and its mobile Internet DOU reached 6.7GB.
  • Wireline broadband customers grew by 30.35 million to a total of 187 million.
  • China Mobile’s family broadband users reached 172 million, an increase of 17.1% year-on-year. Its family broadband comprehensive ARPU reached CNY35.3.
  • At the end of 2019, China Mobile’s government and corporate clients reached 10.28 million, a year-on-year increase of 43.2%. The company’s international business revenue saw a year-on-year increase of 31.4%.

Mr. Yang Jie, China Mobile’s Chairman of the Board said in the press release:

“We were faced with a challenging and complicated operating environment in 2019 where the upside of data traffic was rapidly diminishing and competition within the telecommunications industry and from cross-sector players was becoming ever more intense. Coupled with this was the impact of government policies, including the continued implementation of the “speed upgrade and tariff reduction.”

Against this backdrop, all of us at China Mobile joined together to overcome these hurdles and work towards our ultimate goal of becoming a world-class enterprise by building a dynamic “Powerhouse”. This was centred on the key strategy of high-quality development, supported by a value-driven operating system that leverages our advantages of scale to drive further convergence, integration and digitization across the board.

We structured our organization to enable effective and synergetic capability building and collaborative growth, while nurturing internal vitality. In addition, we further implemented our “5G+” plan to spearhead the development of “four growth engines”, comprising the “customer,” “home,” “business” and “new” markets. These measures have helped us obtain positive momentum in overall operating results, which was a hard-earned achievement for us in a tough year.”

Yang noted that the COVID-19 epidemic had driven more and more businesses and consumers online and encouraged greater takeup of digital and cloud-based services.  “We will leverage these opportunities, as well as the 5G network, to further develop the information and communications services market.”

Business Market:

The “business” market was China Mobile’s new growth engine and we strove to nurture new growth points by fully leveraging our cloud and network convergence advantages, building on our DICT (data, information and communications technology) infrastructure comprising IDC, ICT, Mobile Cloud, big data and other corporate applications and information services. Buoyed by active promotion of our “Network + Cloud + DICT” smart services, customers and revenue recorded rapid growth.

As of the end of 2019, the number of corporate customers increased to 10.28 million, representing year-on-year growth of 43.2%.

Focusing on key sectors such as industry, agriculture, education, public administration, healthcare, transportation and finance, the company deepened go-to-market resources to promote DICT solutions that cater to sector-specific scenarios. This strategy has boosted DICT revenue to RMB26.1 billion, or growth of 48.3% year-on-year, contributing a larger portion of our overall revenue.

“5G+” Achieved a Good Start:

China Mobile sped up the development of 5G and have been fully implementing its “5G+” plan since June 2019, when we were granted the 5G licence. These initiatives have shown good initial results.

The company actively participated in setting international standards for 5G to drive technological development. It led 61 key projects in relation to 5G international standards setting and own more than 2,000 5G patents. It also helped to continuously strengthen the Standalone 5G (within 3GPP Release 15 and 16).

Its “six international standards (3GPP specifications are not standards) on 5G system architecture” and “38 international standards including 5G NR (New Radio) terminals and base station radio frequency” scooped all the top prizes in the 2019 Science and Technology Awards presented by the China Communications Standards Association, demonstrating our leadership in 5G communications standards.

At the same time, the company accelerated the implementation of “5G+” by formulating well- coordinated development of 5G and 4G. It constructed and began operating more than 50,000 5G base stations and launched 5G commercial services in 50 cities. Emerging technologies such as AI, IoT (Internet of Things), cloud computing, big data and edge computing were assimilated into 5G (5G+AICDE) and developed more than 200 critical capabilities, while making breakthroughs in over 100 5G joint projects.

In terms of 5G+Eco, we aimed to develop the ecosystem with other industry players. Through its 5G Innovation Centre and 5G Industry Digital Alliance, more than 1,900 partners were attracted.

The 5G Device Forerunner Initiative, guiding manufacturers to launch 32 5G devices, was established. The level of maturity was basically the same between the 2.6 GHz and 3.5 GHz industry chains. Benefiting from forward-looking planning and effective execution, we expanded 5G+X, where “X” stands for the wider application of 5G, in applications that have been adopted by a plethora of industry sectors, as well as the mass market. For the latter, we launched exclusive plans for 5G customers and feature services such as ultra-high definition videos, cloud-based games and full-screen video connecting tones. As of the end of February 2020, our 5G plans attracted 15.40 million package customers – maintaining an industry-leading position.

In terms of vertical sector, China Mobile explored the possibility of combining 5G with AICDE capabilities, extending collaboration in the industry and deep-diving into classic manufacturing scenarios to develop our leadership in 5G smart manufacturing, 5G remote medical services and 5G automated mining, among other sectors. A total of 50 group-level demo application projects were implemented.

Looking ahead, 5G presents infinite possibilities. China Mobile will continue to take a systematic approach to planning and steadily implementing our “5G+” initiatives. The company will speed up technology, network, application, operations and ecosystem upgrades, accelerate industry transformation by converging technologies, integrate data to strengthen information transmission in society, and introduce digitized management to build the foundation for digital society development. By doing so, China Mobile will seek more extensive 5G deployment, covering more sectors and creating greater efficiency and social value.




3 thoughts on “China Mobile has 15.4 million 5G customers; 5G+ is primary focus area

  1. China Unicom earnings report:

    China Unicom has overcome flat revenue growth to post an 11.1% increase in net earnings for 2019. The state-owned telco slashed opex by 22% and marketing cost by 5% to record a 11.3 billion yuan ($1.6 billion) full-year profit, it revealed today.

    But like rival China Mobile, the improved financial performance can’t hide its tepid top line growth. (See China Mobile reports 15.4M 5G customers.)

    “In 2019, the domestic telecommunications industry development experienced a short-term pain with weak revenue growth and pressure on industry value,” Chairman and CEO Wang Xiaochu said.

    Revenue of RMB290.5 billion ($41 billion) was off 0.1%, while service revenue increased just 0.3% to RMB264.4 billion ($37.3 billion).

    Unicom’s core mobile services business declined 5%, despite an extra 3.4 million customers, while its broadband segment shrank 1.7%.

    Over the last six years China Unicom’s gross revenue has increased just 2% as first its voice and now its data businesses felt the impact of increased competition and government-mandated price-cutting.

    As signs of improvement, Unicom pointed to its 11% increase in earnings before interest, tax, depreciation and amortization (EBITDA) and the rise of 3.5 points in EBITDA as a percentage of service revenues.

    It also stressed the gains in its emerging enterprise services.

    The industrial Internet unit grew by 43% and now accounts for 12% of total services sales. IT services revenue reached RMB10 billion ($1.4 billion), up 78% year-on-year, while the IoT business grew 46%, to RMB3 billion ($420 million).

    The cloud and big data segments, while still small, each more than doubled sales.

    The company also said it is reaping the benefit of the network sharing partnership struck with China Telecom last September.

    The two telcos had jointly saved RMB10 billion ($1.4 billion), Unicom said, enabling it to invest RMB29.7 billion ($4.2 billion) in its mobile networks – up 59% from the previous year – as it readied its 5G network ahead of national launch last November.

  2. China is going all out on 5G construction
    The headline may not be new, but the numbers are.

    The big three telcos are ready to sink around 180 billion yuan ($25.5 billion) into their 5G rollouts in 2020. That’s more than four times the 2019 level.

    It’s not clear whether this is something long planned, or whether it flows from the party leadership directive to double down on 5G and boost the virus-stricken economy. (See China 5G: Unicom and Telecom speed up rollout.)

    However, analysts have complained that the aggregate rise in capex was short of expectations, suggesting that operators have shifted some spend from other items to 5G.

    Additionally, China Tower expects to tip RMB17 billion ($2.4 billion) into 5G this year, taking the total close to RMB200 billion ($28.2 billion).

    It’s not always easy being government-owned
    Being state-owned in a socialist economy isn’t always a doddle.

    Sure, the regulator has your back, and you don’t have to squander your hard-earned cash in a frivolous spectrum auction, but every now and then the public interest rears its ugly head.

    Specifically, the MIIT has been bearing down on operators over the past five years, demanding “faster speeds and lower prices.” The result is a series of price cuts, in particular in mobile.

    In the first year of the scheme, China Mobile cut mobile tariffs by 43%. Its average revenue per user since then has fallen from RMB59 ($8.30) to RMB49 ($6.90). China Unicom’s has shrunk from RMB47.80 ($6.75) to RMB40.10 ($5.65).

    No wonder they struggle to get any revenue growth in their core business.

    Telco leaders need to get their story straight about subs losses
    The plunge in total subscriber numbers over the first two months of the year has attracted a lot of attention both inside and outside China. (See China’s mobile subs base shrinks by 20M.)

    Following a tepid January, the three operators lost 19.4 million customers between them last month, with the smallest player, Unicom, taking the biggest hit.

    One of the more lurid explanations is that the disappearance of millions of subscribers reflects an unreported mass death toll from COVID-19. China’s numbers are dodgy but not that dodgy.

    Problem is, industry bosses themselves aren’t sure what to make of it.

    China Unicom boss Wang Xiaochu blames it on customers dumping dual SIMs. For years, a lot of people have carried a second or third SIM to avoid roaming and long-distance charges. But those charges are disappearing because of changing price structures. Plus, people have been staying at home and connecting over Wi-Fi for the past two months.

    China Telecom vice president Wang Guoquan says it’s because of the closure of retail stores during the outbreak, while China Mobile CEO Yang Jie also pins it on the coronavirus without elaborating how.

    The epidemic is no doubt the biggest factor – the January number is weak because the virus wiped out the traditional Chinese New Year shopping blitz. The collapse in February, while much of the country was in lockdown, appears a direct result of the contagion.

    However, analysts also point to the introduction of even tighter ID authentication rules in December, causing customers to abandon or decide not to renew their services.

    Network sharing is in
    The Telecom-Unicom network-sharing experiment appears to be an unqualified success. It has saved RMB10 billion ($1.4 billion) on rollout costs since last September, according to Unicom figures.

    Combined, it will give the partners scale to go head to head with China Mobile, which expects to have 300,000 basestations in operation by year end. The two smaller operators are targeting 250,000 by the end of the third quarter.

    But it may also pave the way to a partnership between China Mobile and the underfunded new licensee, China Broadcast Network (CBN). (See China’s Newest Operator Now Has 2 Suitors.)

    China Mobile’s Yang Jie confirmed last week he’s had discussions with CBN management on a sharing arrangement.

    There’s some pressure from above to get a deal done. But any agreement struck would certainly look different from the Telecom-Unicom partnership, which is basically one of equals.

  3. China Mobile this week awarded 5G contracts worth $5.2 billion with approximately 90% of the contracts went to Huawei and ZTE. Ericsson won contracts worth RMB4.2 billion and small local vendor CICT will net RMB965 million ($136 million). Nokia reportedly bid, but failed to win any of the contracts from China Mobile.

    This centralized procurement involves 28 China provinces, autonomous regions and municipalities directly under the central government. According to C114, the total demand is 232,143 5G base stations.  At the end of February, the number of 5G base stations owned China Mobile has exceeded 80,000.

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