China telcos add 43.71 5G subscribers in July, while capital spending declines

5G Subscriber Adds:

China’s network operators recorded a net addition of 43.71 million 5G subscribers in July, according to the carriers’ latest available reports.

  • China Mobile, the world’s largest operator in terms of subscribers, added 28.91 million 5G subscribers in July.  It had 279.60 million 5G subscribers at the end of July, compared to 84.05 million 5G customers in July 2020.  The telco’s overall mobile subscriber base at the end of July reached 947.46 million, up compared to 945.50 million in June 2020.
  • China Unicom said it added a total of 7.74 million 5G subscribers during July. During the first seven months of the year, Unicom added a total of 50.24 million 5G subscribers.  The telco ended July with 121.07 million 5G subscribers. China Unicom reported an overall mobile base of with 311.61 million subscribers at the end of last month, up from 310.45 million in June.
  • China Telecom added 7.06 million 5G subscribers in July to take its total 5G subscribers base to 138.21 million.  The telco added 51.71 million 5G customers in the January-July period. China Telecom’s overall mobile base amounted to 364.62 million subscribers at the end of the July, after adding 2.13 million customers during the month.

China Telco CAPEX Crash:

However, total capital spending by the three state owned China telecom operators declined by 35% in the first half, with the number of new 5G base stations down 34% compared with last year. Spending on 5G by the two biggest telcos, China Mobile and China Telecom, slid 19%. China Unicom, has not disclosed its 5G spending but said it had reached only a fifth of its full-year capex target.

China Unicom revealed it had spent only RMB14 billion ($2.2 billion) of its 2021 capex budget of RMB70 billion ($10.8 billion), down 45% from 2020. It has a year-end target for 5G of RMB35 billion ($5.4 billion), the same as 2020.

China Mobile’s 5G investment of RMB50.2 billion ($7.8 billion) was 9% lower than last year, and only 46% of its full-year target of RMB110 billion ($17 billion).

China Tower reported a 28% fall in capex to 10.4 billion yuan ($1.6 billion).

China Telecom’s 5G spend plunged 45% to RMB11.1 billion ($1.71 billion), just over a quarter of its full-year forecast of RMB39.7 billion ($6.1 billion). Total capex declined 37% for the half. From the Chinese website Yicai.com:

From the data point of view, China Telecom’s capital expenditure in the first half of this year was less than one-third of the annual capital expenditure, and the investment progress was lagging behind. Liu Guiqing said that 5G was the largest investment in the first half of the year, including investment in 3.5GHz and 2.1GHz equipment. “On the whole, the investment in 3.5GHz equipment is relatively normal; for 2.1GHz investment, we make corresponding adaptations according to the current situation of the entire industry chain and the terminal ecology. At present, the purchase of 2.1GHz equipment has been completed, 3.5GHz telecom equipment is being negotiated, and there will be results soon.” He said that 87 billion yuan of investment can be completed this year, of which 5G investment is 39.7 billion yuan.

The China telcos maintain the same capex guidance for the full year of around 185 billion yuan ($28.6 billion), slightly up from last year’s 182 billion yuan ($28.1 billion). Yet for China Telecom and China Unicom, those capex numbers look quite challenging.

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5G Base Station Builds:

China’s three major mobile carriers have already activated 961,000 5G base stations and connected 365 million 5G-compatible devices by end-June, Chinese press reported, citing comments by press secretary for the Ministry of Industry and Information Technology (MIIT) Tian Yulong.

Unicom said it had built just 80,000 new base stations in the first half and was aiming to deploy another 240,000 in the latter half of this year.

Meanwhile, China Broadcast Network and China Mobile have recently completed a tender to deploy 400,000 5G base stations this year, as part of the companies’ efforts to launch a shared 5G network. The contracts had been won by Huawei, ZTE, Datang, Nokia and Ericsson.

China Mobile has attributed its lower 5G investment to issues around its partnership with China Broadcast Network in building a new 5G network in the 700MHz band. The main tender was set in July. China’s 5G rollout is a high priority infrastructure project closely supervised by the national government. The two carriers expect this shared 5G network to reach nationwide coverage within the next two years.

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5G Subscriber Forecast & 5G SA Core Network:

China is forecast to reach 739 million 5G subscribers by 2025, according to a recent study by ABI Research. That would represent nearly 40% of the total global 5G subscriber market.

Earlier this year, Liu Liehong, vice minister of industry and information technology, had said that 5G Standalone (5G SA) networks covered all prefecture-level cities across China.

We wonder if all China’s telcos have implemented the same specification for 5G SA/core network and whether it is “cloud native” or not?  Also, whether they use NFV (virtual machines) or containers?

Note there is no standard or implementation specification(s) that would ensure vendor interoperability on 5G SA networks from different telcos.

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References:

https://www.rcrwireless.com/20210824/5g/chinese-carriers-add-43-million-5g-subscribers-july

https://www.lightreading.com/5g/chip-shortage-taking-its-toll-on-china-5g-rollout/d/d-id/771681?

https://www.yicai.com/news/101136803.html

https://asia.nikkei.com/Spotlight/5G-networks/Chinese-telecom-operators-cut-back-5G-network-construction

China Telcos Lose Subscribers; 5G “Co-build and Co-share” agreement to accelerate

2Africa subsea cable system adds 4 new branches

The 2Africa consortium of China Mobile International, Facebook, MTN GlobalConnect, Orange, STC, Telecom Egypt, Vodafone and WIOCC has announced the addition of four new branches to their subsea cable.  That will extend 2Africa’s connectivity to the Seychelles, the Comoros Islands, Angola, and a new landing in south-east Nigeria.  The new cable branches join the recently announced extension to the Canary Islands.

2Africa, which will be the largest subsea cable project in the world, will deliver faster, more reliable internet service to each country where it lands. Communities that rely on the internet for services from education to healthcare, and business will experience the economic and social benefits that come from this increased connectivity.

Alcatel Submarine Networks (ASN) has been selected to deploy the new branches, which will increase the number of 2Africa landings to 35 in 26 countries, further improving connectivity into and around Africa. As with other 2Africa cable landings, capacity will be available to service providers at carrier-neutral data centers or open-access cable landing stations on a fair and equitable basis, encouraging and supporting the development of a healthy internet ecosystem.

Marine surveys completed for most of the cable and cable manufacturing is underway.  Since launching the 2Africa cable in May 2020, the 2Africa consortium has made considerable progress in planning and preparing for the deployment of the cable, which is expected to ‘go live’ late 2023.  Most of the subsea route survey activity is now complete. ASN has started manufacturing the cable and building repeater units in its factories in Calais and Greenwich to deploy the first segments in 2022.

Egypt terrestrial crossing already completed

One of 2Africa’s key segments, the Egypt terrestrial crossing that interconnects landing sites on the Red and the Mediterranean Seas via two completely diverse terrestrial routes, has been completed ahead of schedule. A third diverse marine path will complement this segment via the Red Sea.

About MTN GlobalConnect
GlobalConnect is a Pan-African digital wholesale and infrastructure services company, and an operating company in the MTN Group. GlobalConnect manages MTN’s international and national major wholesale activities, in addition to offering reliable wholesale and infrastructure solutions for fixed connectivity and wholesale mobility solutions that include international mobile services, Voice, SMS, signalling, roaming and interconnect. The MTN Group launched in 1994 is a leading emerging market operator with a clear vision to lead the delivery of a bold new digital world and is inspired by the belief that everyone deserves the benefits of a modern connected life. Embracing the Ambition 2025 strategy, MTN is anchored on building the largest and most valuable platform business, with a clear focus on Africa. The MTN Group is listed on the JSE Securities Exchange in South Africa under the share code “MTN”.

For more information, please visit www.globalconnect.solutions – https://www.mtn.com

About stc
With its headquarter in Riyadh, stc group is the largest in the Middle East and North Africa based on market cap. stc’s revenue for 2020 amounted to 58,953million SAR (15,721 million US dollars) and the net profit amounted to 10,995 million SAR (2,932 million US dollars). stc was established in 1998 and currently has customers around the globe. It is ranking among the world’s top 50 digital companies and the first in the Middle East and North Africa according to Forbes. It focuses on providing services to enterprise and consumer customers through a fiber-optic network that spans 217,000 kilometers. stc group was among the first in MENA region to launch 5G networks and was considered one of the fastest globally in deploying 5G network as stc already deployed around 4,000 5G towers as end of 2020. stc group has 14 subsidiaries in the Kingdom, gulf and around the world, and its own 100% of stc Bahrain, 51.8% stake in stc Kuwait and 25% stake in Binariang GSM Holding in Malaysia which owns 62% of Maxis in Malaysia.
In Saudi Arabia (the group’s main operation site) stc operates the largest modern mobile network in the Middle East as it covers more than 99% of the country’s populated areas in addition to providing 4G mobile broadband to about 90% of the population across the Kingdom of Saudi Arabia. In addition to the above-mentioned, stc is a strong regional player in IoT, managed services, system integration, cloud computing, information security, big data Analytics fintech and artificial intelligence.

For more information, please visit https://www.stc.com.sa; or to follow us on Twitter: @stc , @stc_ksa

About Telecom Egypt
Telecom Egypt is the first total telecom operator in Egypt providing all telecom services to its customers including fixed and mobile voice and data services. Telecom Egypt has a long history serving Egyptian customers for over 160 years maintaining a leadership position in the Egyptian telecom market by offering its enterprise and consumer customers the most advanced technology, reliable infrastructure solutions and the widest network of submarine cables.  Aside from its mobile operation “WE”, the company owns a 45% stake in Vodafone Egypt. Telecom Egypt’s shares and GDRs (Ticker: ETEL.CA; TEEG.LN) are traded on The Egyptian Exchange and the London Stock Exchange. Please refer to Telecom Egypt’s full financial disclosure on ir.te.eg

For more information, email: investor.relations@te.eg

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References:

https://www.orange.com/en/newsroom/press-releases/2021/new-branches-2africa-subsea-cable-system

 

Gartner: Worldwide 5G Network Infrastructure Revenues to Grow 39% in 2021

Worldwide 5G network infrastructure revenue is on pace to grow 39% to total $19.1 billion in 2021, up from $13.7 billion in 2020, according to the latest forecast by Gartner, Inc.

Communications service providers (CSPs) in mature markets accelerated 5G development in 2020 and 2021 with 5G representing 39% of total wireless infrastructure revenue this year.

“The COVID-19 pandemic spiked demand for optimized and ultrafast broadband connectivity to support work-from-home and bandwidth-hungry applications, such as streaming video, online gaming and social media applications,” said Michael Porowski, senior principal research analyst at Gartner.

5G is the fastest growing segment in the wireless network infrastructure market (see Table 1). Of the segments that comprise wireless infrastructure in this forecast, the only significant opportunity for investment growth is in 5G. Investment in legacy wireless generations is rapidly deteriorating across all regions and spending on non-5G small cells is poised to decline as CSPs move to 5G small cells.

Table 1: Wireless Network Infrastructure Revenue Forecast, Worldwide (Millions of U.S. Dollars)

Segment 2020 Revenue 2021 Revenue 2022 Revenue
5G 13,768.0 19,128.9 23,254.6
LTE and 4G 17,127.8 14,569.1 12,114.0
3G and 2G 3,159.6 1,948.2 1,095.2
Small Cells Non-5G 6,588.5 7,117.9 7,113.9
Mobile Core 5,714.6 6,056.2 6,273.3
Total 46,358.5 48,820.2 49,851.0

Source: Gartner (August 2021)

Regionally, CSPs in North America are set to grow 5G revenue from $2.9 billion in 2020 to $4.3 billion in 2021, due, in part, to increased adoption of dynamic spectrum sharing and millimeter wave base stations. In Western Europe, CSPs will prioritize on licensing spectrum, modernizing mobile core infrastructure and navigating regulatory processes with 5G revenue expected to increase from $794 million in 2020 to $1.6 billion in 2021.

Greater China is expected to maintain the No.1 global position in global 5G revenue reaching $9.1 billion in 2021, up from $7.4 billion in 2020.  With China’s government funding 5G development for the three state owned carriers, that’s no surprise.

The big beneficiaries of China’s 5G infrastructure spending will be its domestic equipment makers, Huawei, ZTE, and (state owned) Datang Telecom.  Despite clamoring for Sweden to permit Huawei 5G equipment to be deployed, Ericsson only received 3% of a joint 5G radio contracts from China Telecom, China Unicom and 2% from China Mobile, according to ReutersNokia, which was expected to take away Ericsson’s market share in China, did not receive any share, according to a tender document published by the Chinese companies.

In a way that’s a win for the Swedish vendor – and a brief share price hike backs up that statement – which won just 2% of an earlier deal from China Mobile. But if they want to secure their share of the multiple billions of dollars of global 5G infrastructure revenues forecast by Gartner, the likes of Ericsson and Nokia will need to keep winning contracts in their home markets.

5G Coverage in Tier-1 Cities Will Reach 60% in 2024:

While 10% of CSPs in 2020 provided commercialized 5G services, which could achieve multiregional availability, Gartner predicts that this number will increase to 60% by 2024, which is a similar rate of adoption for 4G- LTE in the past.

“Business and customer demand is an influencing factor in this growth. As consumers return to the office, they will continue to upgrade or switch to gigabit fiber to the home (FTTH) service as connectivity has become an essential remote work service,” said Porowski. “Users will also increasingly scrutinize CSPs for both office and remote work needs.”

This rapid shift in customer behavior is driving growth in the global passive optical network (PON) market as a preferred technology. The 10-Gigabit-capable symmetric-PON (XGS-PON) is not a new technology and with the price difference with other technologies narrowing, CSPs are willing to invest in XGS-PON to differentiate themselves in customer experience and network quality. Gartner estimates that by 2025, 60% of Tier-1 CSPs will adopt XGS-PON technology at large-scale to deliver ultrafast broadband services to residential and business users, up from less than 30% in 2020.

Gartner clients can learn more in the reports “Forecast Analysis: Communications Service Provider Operational Technology, Worldwide” and “Forecast: Communications Service Provider Operational Technology, Worldwide, 2019-2025, 2Q21 Update.”

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Small Cells?

While Gartner did not split out small cells’ contribution to the overall 5G infrastructure segment, evidence thus far suggests the market is progressing more slowly than many had once believed.

Last month, Crown Castle increased its guidance for the second time this year due to a strong cell towers market, but halved the number of small cells it expects to deploy in 2021 to 5,000.  The company noted that wireless network operators have focused on tower-based 5G rollouts at the expense of small cells.

References:

https://www.gartner.com/en/newsroom/press-releases/2021-08-04-gartner-forecasts-worldwide-5g-network-infrastrucutre-revenue-to-grow-39pc-in-2021

https://www.reuters.com/business/media-telecom/ericsson-gets-5g-radio-contracts-china-nokia-disappoints-sources-2021-08-02/

5G network kit revenues to near $20 billion this year — report

 

China Mobile reports 9.5% increase in sales; depreciation and electricity expenses will increase at relatively high rates

China Mobile is the world’s largest wireless network operator by customers, serving 940 million total subscribers in the Q1 2021.    The #1 China carrier had 189 million 5G customers a March, an increase of 24 million since December.  Its 4G-LTE use base also grew during Q1 2021, up 36 million year-on-year to 788 million.

China Mobile reported a 9.5% year-on-year increase in sales, to 198.4 billion Chinese yuan ($30.6 billion), for its first quarter of 2021. China Mobile’s net profit increased by 2.3% to about RMB24.1 billion ($3.7 billion).

The company states that continued to devote concerted efforts to promoting digitalized and intelligent transformation and achieving high-quality development. Placing a special focus on its “4×3” strategic core and fully implementing the “5G+” plan, it managed to maintain stable growth in key business performance indicators and delivered sound development momentum, taking solid steps towards becoming a world-class enterprise by building a dynamic “Powerhouse.”

China Mobile Chairman Yang Jie said following its large-scale 5G network deployment, it expects corresponding depreciation and electricity expenses to increase at relatively high rates.

Following the large scale operation of 5G, the China Mobile Group expects the corresponding depreciation and electricity expenses will increase at relatively high rates. As the Group scales up the development of DICT and other information services, the demand for resources to address the need for business transformation and upgrade will remain robust.

Facing these challenges and pressure, the Group will continue to explore new sources to increase revenue, and at the same time take measures to lower costs and enhance efficiency. It will also precisely allocate resources by adhering to the principle of ensuring a sufficient budget for areas essential to promote growth, while reducing and controlling expenses on certain selected areas.

While fostering business transformation, promoting innovation and nurturing new areas of growth, the Group will strive to achieve stable and healthy growth in telecommunications services revenue and net profit, maintain good profitability and continuously create value for investors.

China Mobile said it was under pressure to make other cutbacks to cope with the increase in electricity fees and depreciation charges in 2020.

China Mobile’s The revenue growth was mainly due to a 67 per cent increase in handset sales to CNY20.8 billion, which the operator credited to a wider range of 5G models at more affordable prices. Telecoms service turnover increased 5.2 per cent to CNY177.7 billion.

Total subscribers fell by 6 million to 940 million. ARPU edged up 1.1 per cent to CNY47.40, while average monthly data usage increased 34.9 per cent to 11.2GB.  The volume of total voice minutes increased 8.3 per cent and SMS usage dropped 12.6 per cent.

China Mobile also faces a huge capital expenditure bill this year as it extends 5G services outside the big cities and into less densely populated communities.  It plans to spend RMB183.6 billion ($28.3 billion) in total, up from RMB180.6 billion ($27.8 billion) last year. In its last annual report, it said that approximately RMB110 billion ($17 billion) would go toward 5G rollouts.

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References:

https://www.chinamobileltd.com/en/file/view.php?id=246145

https://www.lightreading.com/5g/china-mobile-warns-of-mounting-5g-costs/d/d-id/768941?

China Mobile revenue climbs on 5G handset growth

 

MIIT: China has 260M 5G subs; Telecom business revenue significantly increased

China telecom regulator MIIT (Ministry of Industry and Information Technology) revealed this week that China has 260 million 5G subscribers at the end of February 2021.  That is a huge number and more than the rest of the world combined [1.], but still a long way short of the 361 million claimed by the three operators. in February.

  • China Mobile reported 173.2 million 5G package customers compared to 15.4 million 5G customers in February 2020.  China Mobile’s overall mobile subscriber base was said to be 937.16 million at the end of February, down from 940.86 million in January.
  • China Telecom added a total of 6.2 million 5G subscribers in February 2021 for a total of 103.4 million.
  • China Unicom had 84.5 million 5G subscribers at the end of February 2021.

Note 1. GSA says that global 5G subscriptions grew by 57% in the fourth quarter of 2020 to reach nearly 401 million globally (representing 4.19% of the entire global mobile market).  By the end of 2025, 5G will account for 31% of the global market (at 3.39 billion subscriptions), although LTE will still be dominant at 53.3% of all global mobile subscriptions.

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China’s vice-minister of industry and information technology Liu Liehong recently said that a total of 718,000 5G base stations have been built in China, accounting for nearly 70% of the world’s total 5G cell sites.

During Mobile World Congress Shanghai 2021, government officials said that Chinese carriers have invested more than CNY260 billion ($40.2 billion) to build the world’s largest 5G network.

MIIT further stated:

The growth rate of telecom business revenue has increased significantly. From January to February, the total revenue of telecommunications services reached 237.3 billion yuan, an increase of 5.8% year-on-year, and the growth rate increased by 4.3 percentage points year-on-year. The total telecommunications business calculated at the constant price of the previous year was 249.1 billion yuan, a year-on-year increase of 25.9%.

The scale of mobile phone users is basically stable, and 5G users are developing rapidly. As of the end of February, the total number of mobile phone users of the three basic telecommunications companies reached 1.592 billion, a year-on-year increase of 0.8%. As of the end of February, the number of 5G mobile terminal connections of the three basic telecommunications companies reached 260 million, a net increase of 61.3 million from the end of the previous year, accounting for 16.3% of mobile phone users.

Light Reading’s Robert Clark wrote: “The three (China) telcos’ annual filings over the past two weeks indicate that between them they spent a hefty 173 billion yuan ($26.5 billion) on 5G and they’re not slowing down; they’ve set aside another 185 billion yuan for 2021.”

“Their pricing, with plenty of encouragement from government officials, is also aggressive, with China Mobile’s 5G entry package costing just 128 yuan ($19.56). The heavy investment and the moderate pricing in pursuit of national objectives is why their results indicate little reward for the effort so far.”

MIIT also commented on other telecom services (besides 5G):

Data and Internet business revenue accounted for 60%, supporting the steady growth of overall telecom business revenue. From January to February, the three basic telecommunications companies completed fixed data and Internet business revenues of 41.5 billion yuan, a year-on-year increase of 10.2%, accounting for 17.5% of telecommunications business revenues, accounting for a year-on-year increase of 0.8 percentage points, driving a 1.7 percentage point increase in telecommunications business revenue . The revenue from mobile data and Internet services showed a decline for the first time. The completed business revenue was 106.2 billion yuan, a year-on-year decrease of 1.2%, and its share of telecom business revenue fell to 44.7%.

Fixed and mobile voice services declined steadily, and their share of telecom business revenue continued to decline. From January to February, the three basic telecommunications companies completed fixed voice and mobile voice business revenues of 3.82 billion yuan and 18.64 billion yuan, a year-on-year decrease of 1.1% and an increase of 5.0%, respectively, accounting for 9.5% of the total revenue of telecommunications services, and a decrease of 0.1%. Percentage points. The rapid growth of income from emerging businesses has strongly promoted the growth of telecom business income. The three basic telecommunications companies are actively transforming and upgrading, promoting IPTV, Internet data centers, big data, cloud computing, artificial intelligence and other emerging businesses. From January to February, they completed a total of 36.2 billion yuan in related business income, a year-on-year increase of 28.9%. The proportion increased sharply by 2.8 percentage points year-on-year to 15.3%, driving the growth of telecom business revenue by 3.6 percentage points.

The proportion of fixed broadband access users with speeds above 100M has exceeded 90%, and the number of gigabit users has continued to increase. The total number of fixed Internet broadband access users reached 492 million, a year-on-year increase of 8.9% and a net increase of 8.67 million from the end of the previous year. Among them, there are 463 million FTTH/O users, accounting for 94% of the total number of fixed Internet broadband users. The number of fixed Internet broadband access users with an access rate of 100Mbp and above reached 450 million, accounting for 90.4% of the total number of users, an increase of 0.5% from the end of the previous year; the promotion of gigabit broadband services was accelerated, and the access rate of 1000Mbps and above was fixed. The number of Internet broadband access users reached 8.03 million, a net increase of 1.63 million over the end of the previous year.

Mobile Internet traffic increased significantly, and DOU remained at a relatively high level in February. From January to February, the cumulative mobile Internet traffic reached 30.9 billion GB, a year-on-year increase of 31.8%. Among them, the Internet traffic through mobile phones reached 29.7 billion GB, a year-on-year increase of 31.2%, accounting for 96% of the total mobile Internet traffic. In February, the average mobile Internet access traffic (DOU) per household was 10.85GB/household, which was 1.97GB/household higher than the same period last year.

The penetration rate of fixed broadband access users of 100M and above tends to be even in all regions. As of the end of February, fixed broadband access users of 100Mbps and above in the eastern, central, western and northeastern regions reached 189.68 million, 11.17 million, 116.57 million and 26.74 million, respectively, accounting for 89.3. %, 91.7%, 90.8% and 91.8%. The difference between the highest proportion of fixed broadband access users above 100M and the lowest proportion in each province was 15.3 percentage points.

China Unicom and China Telecom say nearly a quarter of their mobile customers are on 5G plans.  Chna Unicom boosted ARPU 4%, while China Telecom reported 5G ARPU nearly 50% above its blended ARPU.

China Mobile reported a 1% rise in profit but, despite the huge 5G subscriber base, recorded another decline in mobile ARPU.One winner for China Mobile was broadband access, which grew 17%, while China Telecom and China Unicom both experienced large increases in their smart home services.

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Editorial Comment:

Many experts don’t trust economic numbers released by China’s government. Questions over the accuracy of China’s economic data, including industry groups like telecom, persist due to the lack of transparency used in the collection process. Critics say the government does not state how the data is collected or the different components that form the final numbers that are released to the public.

The methodology China uses to calculate its economic and industry data is opaque, and some knowledgeable people even accuse the government of abruptly changing methods without announcement to distort figures and hide declines.

The motivation seems to be to make China’s economy and industry groups look much stronger than they really are.

Most analysts treat any official Chinese data with caution and skepticism.  Yet they have few, if any ways to establish an alternative, more accurate assessment of the world’s second-largest economy.

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References:

https://www.miit.gov.cn/gxsj/tjfx/txy/art/2021/art_82f101e1d078447fac75443a50348b7c.html

https://www.lightreading.com/asia/china-5g-race-taking-its-toll-on-operators/d/d-id/768369?

https://gsacom.com/paper/lte-and-5g-subscribers-march-2021-q4/

https://www.rcrwireless.com/20210323/5g/chinsese-carriers-add-almost-17-million-5g-customers-february

https://techblog.comsoc.org/2020/10/21/china-mobile-has-114m-5g-package-subscribers-vs-204m-broadband-wireline-customers/

Analysis and Implications: China’s 3 Major Telecom Operators to be delisted by NYSE

The New York Stock Exchange (NYSE) said it will delist China’s three large state owned telecom carriers. The move was expected after a November U.S. government order barring Americans from investing in companies it says help the Chinese military.

Senators want review of Chinese telecoms' approvals to operate in US

China Telecom should be banned from operating in US, departments say | South China Morning Post

The NYSE said it would suspend trading in securities issued by China Mobile, China Telecom and China Unicom by January 11th.  The big board also said it would also halt trading in closed-end funds and in exchange-traded products listed on its NYSE Arca exchange if they hold banned China stocks.

The U.S. Defense Department (DoD) had previously listed the three companies as having significant connections to Chinese military and security forces.  The delisting highlights the faltering of long-established business ties between the United States and China, which were set up over decades as China sought to internationalize and reform its state-run corporate behemoths (see China-U.S. Cold War backgrounder below).

The NYSE decision is the latest setback for these companies, which rank among the largest global telecommunications providers.   The exchange’s decision is unlikely to seriously harm the Chinese telecom giants in the near term. Mounting pressure from Washington has already stymied their ability to operate in the U.S., a country that makes up a negligible amount of their international business.

China’s top three network providers still benefit from hundreds of millions of customers in their home country. That has attracted investors to their Chinese-listed shares. The cellphone carriers have spent billions of dollars on new fifth-generation wireless networks over the past two years with support from officials in Beijing, who have called 5G upgrades a national priority.

All three telecoms companies operate under Beijing’s firm control. They are ultimately owned by a government agency, the State-owned Assets Supervision and Administration Commission, and are often ordered to pursue Beijing’s goals. China’s ruling Communist Party sometimes shuffles executives among the three companies.

They are the only three companies in China that are permitted to provide broad telecommunications network services, which Beijing regards as a strategic industry that must remain under state control.

Xi Jinping, China’s top leader (President of the People’s Republic of China 中华人民共和国主席), has talked about making state companies bigger and stronger rather than more streamlined. That has led to concerns among some economists and entrepreneurs that the Chinese government is taking a greater role in private enterprise.

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Impact of the Delisting:

At the same time, the imminent delisting of several major Chinese companies will get the attention of portfolio managers, after a year long push to ensure Chinese firms’ compliance with U.S. audit rules. While the final outcome of that effort is unclear, the NYSE decision underscores the fraught politics of the U.S.-China relationship as the Trump administration comes to a close.

“The delisting issue is a live one with financial clients,” said Leland Miller, chief executive of China Beige Book International, which provides data on China’s economy to international investors. “There are some jittery people out there.”

On Friday, China Unicom said it would release a statement in due course. Neither China Telecom or China Mobile responded to WSJ requests for comment.

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China Telecoms Shares Greatly Underperform:

China Mobile’s U.S. stock is thinly traded compared with its Hong Kong securities, FactSet data shows. About 2.1 million American depositary receipts traded daily on average over the past three months, compared with 34 million Hong Kong shares a day. Each ADR is equivalent to five ordinary shares in Hong Kong.

U.S. shares in China Mobile, the largest of the three companies by market value, declined 29% over the past year, according to FactSet, while China Telecom dropped 30% and China Unicom fell 39%. Over the same span, the S&P 500 index returned 18% and the communications-services sector of the MSCI World Index rose 22%. All figures reflect total returns, including dividends.

Over the past decade, China Mobile shares have declined 15% including dividend payments, FactSet data show, while China Telecom has dropped 32% and China Unicom has fallen 54%. The S&P 500 has gained 267% on the same basis and the MSCI World communications sector has gained 165%.

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Backgrounder:  China vs U.S. Cold War:

An executive order signed by President Trump in November will block Americans from investing in a list of companies the U.S. government says supply and support China’s military, intelligence and security services. The ban starts on Jan. 11 and investors have until November to divest themselves of their holdings.

The list currently includes 35 companies—including China’s largest chip maker—as well as surveillance, aerospace, shipbuilding, construction and technology companies.

It wasn’t initially clear whether the order covered subsidiaries as well as parent companies, and U.S. government leaders clashed over how broad the blacklist should be, The Wall Street Journal reported in December.

The Chinese government has accused Washington of misusing national security as an excuse to hamper competition and has warned that Trump’s order would hurt U.S. and other investors worldwide.

Political analysts expect little change in policy under President-elect Joe Biden due to widespread frustration with China’s trade and human rights records and accusations of spying and technology theft.

U.S. officials have complained that China’s ruling Communist Party (CCP) takes advantage of access to American technology and investment to expand its military, already one of the world’s biggest and most heavily armed.

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References:

https://ir.theice.com/press/news-details/2020/NYSE-to-Commence-Delisting-Proceedings-in-Securities-of-Three-Issuers-to-Comply-with-Executive-Order-13959/default.aspx

https://www.wsj.com/articles/nyse-to-delist-chinas-major-telecommunications-operators-11609498750

https://www.nytimes.com/2021/01/01/business/nyse-delist-china-mobile.html

https://apnews.com/article/donald-trump-business-hong-kong-china-08e71111b26c119048c523c5ba3ebde5

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January 5, 2021 UPDATE:

The New York Stock Exchange reversed its decision to delist China Mobile, China Telecom, and China Unicom before it becomes effective.

NYSE said that “in light of further consultation with relevant regulatory authorities in connection with Office of Foreign Assets Control FAQ 857, available here, the New York Stock Exchange LLC (“NYSE”) announced today that NYSE Regulation no longer intends to move forward with the delisting action in relation to the three issuers enumerated below (the “Issuers”) which was announced on December 31, 2020.”

Meanwhile, the reversal is not yet final, as the NYSE maintained that it would “continue to evaluate the applicability of Executive Order 13959 to these Issuers and their continued listing status.” There is no substantiated evidence that pressure from China or intervention from the incoming Biden administration has played a role in the change of mind by NYSE.

Technically all the three Chinese state-owned telcos are listed on the Stock Exchange of Hong Kong (HKEX), and what’s traded in New York is an instrument called American depositary receipts (ADRs), which enables American investors to trade on foreign companies listed elsewhere.

On Monday, as a response to NYSE’s delisting announcement, the three telcos updated the market that ADRs represent between 3.3% and 8% of their total tradable shares. According to an earlier response by China Securities Regulatory Commission (CSRC) to NYSE’s original decision, the three operators’ ADRs only account for less than 2.2% of the equity shares of these companies, with “a total market capitalization of less than 20 billion RMB yuan” ($3.1 billion). China Mobile is the heaviest user of this instrument, accounting for 90% of the total value.

According to the Treasury Department, if NYSE’s original decision to delist were to go ahead, these companies would also need to be eliminated from other financial instruments, including derivatives, depositary receipts, exchange-traded funds, index funds, and mutual funds. The reversal of decision may have taken away the requirement for traders to make immediate changes in their products, some measures may still be needed as a precaution, and the actions may not be limited to the three telcos.

In December two index providers, FTSE Russell and S&P Dow Jones have both removed a number of Chinese companies from some of their indexes following the executive order. There are 35 companies on the Treasury Department’s list compiled for this particular executive order, including, in additions to the three operators, the usual suspects like Huawei and SMIC.

NYSE U-turns on delisting Chinese telcos

January 6, 2021 Update:

New York Stock Exchange Reverses Course Again, Will Delist 3 Chinese Telecom Firms After All!

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City on March 20, 2020. (Spencer Platt/Getty Images)

China Mobile has 114M “5G Package” subscribers vs 204M broadband wireline customers

China Mobile announced yesterday that it had approximately 946 million mobile customers as at 30 September 2020, which was down about 1 million from the previous quarter.  There were 770 million 4G customers and 114 million 5G package customers. The latter number is a 44 million increase in the past three months. However, the growth in 5G subscribers is not quite what it seems. Like China Telecom, China Mobile uses the term “5G package customers,” which counts 4G customers on 5G plans. [The 3rd state owned China telco – China Unicom – does not yet give a breakout of 5G subs from its mobile subscriber base.] The 4G subscriber base, reflecting some migration to 5G package plans, shrank by 10 million during Q3-2020.

During the first three quarters of the year, China Mobile handset data traffic increased by 35.0% year-on-year to 65.3 billion GB with handset data DOU reaching 9.1GB. Total voice usage dropped by 7.1% year-on-year to 2,258.0 billion minutes, showing a further reduced rate of decline. Total SMS usage rose by 15.5% year-on-year to 713.0 billion messages and maintained favourable growth. Mobile ARPU continued to demonstrate a flattened rate of decline, dropping by 2.6% year-on-year to RMB48.9 for the first three quarters of the year.

As of 30 September 2020, China Mobile’s total number of  broadband wireline customers was 204 million, with a net increase of 17.17 million for the first three quarters of the year. Wireline broadband ARPU amounted to RMB32.4.

Slight of hand: China Mobile's growth in subs includes 4G customers on 5G plans.

Image Credit: China Mobile

China Mobile said it will “continue to put in an all-out effort to implement the “5G+” plan, further promote scale-based and value-oriented operations and foster the all-round development of CHBN markets, thereby maintaining growth in telecommunications services revenue for the full-year of 2020.”  The Group acknowledged the increasing cost associated with 5G operations and maintenance, but did not elaborate on what those costs were:

Facing the challenges resulting from increasing costs incurred by 5G operations and maintenance and business transformation, the Group will allocate resources by adhering to the principle of ensuring a sufficient budget for areas essential to promote growth, while reducing and controlling expenses on certain selected areas. In addition, it will take further measures to reduce costs and enhance efficiency, alongside efforts to maintain good profitability. The Group will maintain stable profit attributable to equity shareholders for the full-year of 2020, continuously creating value for investors.

Ericsson, which previously received a $593 million 5G contract with China Mobile for base stations wrote in an email to Light Reading: “”We have been riding on the investments in China and there are likely to be more than 500,000 base stations by the end of the year in China launched on 5G and of course we are quite pleased to participate in that rather fundamental and quite strong rollout.”

Market research firm Dell’Oro forecasts that China’s 5G rollout will drive an 8% increase in worldwide sales of radio access network products this year. Excluding China, it forecasts no growth in the RAN infrastructure market. Additional highlights from Dell’Oro’s 2Q2020 RAN report:

  • 5G NR radio shipments accelerated 5x to 6x during 1H20, driven by robust growth in China.
  • Millimeter Wave 5G NR deployments continued to advance rapidly, with revenues growing nearly four-fold.
  • Initial estimates suggest that vendor rankings remained stable between 2019 and 1H20, while revenue shares changed somewhat as the Chinese suppliers reached new revenue share highs.
  • Near-term RAN forecast has been adjusted upward, to reflect the faster-than-expected growth in China.

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References:

https://www.chinamobileltd.com/en/file/view.php?id=237832

https://www.lightreading.com/5g/china-mobile-5g-subs-top-114m-in-q3/d/d-id/764778?

https://www.lightreading.com/5g/ericsson-rides-high-on-china-5g-boom/d/d-id/764770?

Huawei Executive: “China’s 5G user experience is fake, dumb and poor”-is it a con game?

RAN Market Growth Accelerated in 1H20, According to Dell’Oro Group

China Mobile and Huawei deploy 5G base station at 6,500m on Mt Everest!

China Mobile and Huawei have together built the highest elevation 5G (or any other) base station on this planet– at 6500 meters (21,300 feet) at Mount Everest where there are no roads or trails. [Note that the summit is 8,848 meters, but will be measured again this year].

The base station along with two others at lower elevations, will enable China Mobile to run its 5G wireless network on the world’s highest mountain.  It will surely be a great aid to climbers which had to previously use satellite phones for ultra high altitude communications with their high camps.

Zhou Min, general manager of Tibet branch of China Mobile, said the facility will ensure reliable telecommunication for the activities of mountain climbing, scientific research, environmental monitoring and high-definition live streaming. The building of 5G infrastructure is in tandem with the measuring of the height of the peak, which officially started on Thursday.

“It comes on the 60th anniversary of the first successful ascent of Mount Everest from the northern slope and the 45th anniversary of China’s first official accurate measurement of Mount Everest,” declared the press release. “Significantly, the 5G network on Mount Everest will provide communication services for the 2020 Mount Everest re-measurement.”

How high is Mount Everest in meters, feet, km & miles

The base station launch marks the 60th anniversary of the first successful ascension of Mount Everest from the northern slope. Base stations are now at the Mount Everest Base Camp at 5,300 metres, the Transition Camp at 5,800 metres, and the Forward Camp at 6,500 meters.

A China Mobile technician told state media that the new 5G network is fast enough for climbers and scientists to have 4K and VR live streaming on the mountain.

Huawei’s 5G AAU and SPN technologies were applied at the base stations, managed and maintained by a dozen network specialists stationed there 24/7 at altitudes of 5,300 meters and above.

Huawei claims that its 5G AAU is highly integrated into a compact size, making it easy for deployment and installation and it fits particularly well for infrastructure in extreme environments such as Mount Everest. In this project, a network in the “stand-alone plus non-stand alone” (SA+NSA) mode connects five 5G base stations.Meanwhile, the 5G connectivity is achieved by Huawei’s Massive MIMO technology.

Huawei’s Massive MIMO comes with three-dimensional narrow beams. At an altitude of 5,300 meters, the 5G download speed exceeded 1.66 Gbps, where the upload speed tops 215 Mbps, claims Huawei. Some of the other technologies being employed by the Chinese telecom equipment giant are Intelligent OptiX Network and HoloSens intelligent video surveillance system.  The 5G base station at Everest base camp includes a Gigabit ONT, Huawei’s 10G PON OLT and 200G ultra-high-speed transmission platform, and the HoloSens intelligent video surveillance system.

Pictures of 5G Base station at 6500 meters   Photo credits: Huawei

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The press release concluded as follows:

Huawei strongly believes that technology means to make the world better.  The beauty of Mount Everest can be displayed via 5G high-definition video and VR experience, which also provides further insights for mountaineers, scientists and other specialists into the nature. The ground-breaking establishment on Mount Everest once again proves that 5G technology connect mankind and the Earth harmoniously.

References:

https://www.huawei.com/en/press-events/news/2020/4/china-mobile-huawei-deliver-world-highest-5g

https://www.bloombergquint.com/technology/5g-signal-now-available-on-mount-everest-peak

https://timesofindia.indiatimes.com/gadgets-news/china-mobile-and-huawei-establish-worlds-highest-5g-site-on-mount-everest/articleshow/75493507.cms

 

 

China Mobile says COVID-19 effected Q1 2020 Results: Loss of 4M 4G subs, 31.7M 5G subs

China Mobile’s  first quarter 2020 earnings report was somewhat disappointing, save for 5G.  Revenues, earnings and profits all decreased for the first quarter as the world’s largest mobile operator felt the impact of the coronavirus outbreak in China.

The state owned telco lost 4 million customers which is < 1/2% of their customer base in the first quarter.  There were 946 million total China Mobile subscribers at the end of March 2020.

Revenues fell 2%, to 181.3 billion Chinese yuan (US$25.6 billion), compared with the year-earlier period, while revenue from telecommunications services was RMB168.9 billion, up by 1.8% over the same period last year.  Profit attributable to equity shareholders was RMB23.5 billion ($3.3 billion), down by 0.8% over the same period last year.

The company (referred to as “the Group”) addressed the impact of COVID-19 in their Q1 2020 earnings report:

COVID-19 posed an impact on the overall society and economy in the first quarter of 2020. The Group’s business development was no exception. In light of COVID-19, the Group has introduced “three safeguards” which endeavoured to provide reliable communications, maintain service continuity and step up comprehensive prevention and control measures. Leveraging the demand for informatization services brought about by measures to prevent and control COVID-19 and the resumption of work and production, the Group has also accelerated business transformation and upgrade.

The Group’s total number of mobile customers was around 946 million as at 31 March 2020. Among them, the numbers of 4G customers and 5G package customers were 752 million and 31.72 million, respectively. During the first quarter of the year, data traffic business maintained growth momentum with handset data traffic recording a year-on-year increase of 43.4% and handset data DOU (average handset data traffic per user per month) reaching 8.3GB. Total voice usage declined by 16.3% year on-year to 661.4 billion minutes, which was attributable to OTT substitution and COVID-19.

Buoyed by the rapid growth of corporate SMS, total SMS usage rose by 45.4% year-on-year. Mobile ARPU dropped by 6.7% year-on-year to RMB46.9 for the first quarter of the year and the decline rate has moderated compared to that of the previous year. As at 31 March 2020, the total number of wireline broadband customers was 191 million, with a net increase of 4.10 million for the first quarter of the year. Wireline broadband ARPU amounted to RMB31.3.

Amidst COVID-19, the Group’s telecommunications services revenue grew by 1.8% year on-year to RMB168.9 billion for the first quarter of 2020. Currently, measures to prevent and control COVID-19 are still underway and some impact may carry over.

The Group will continue to foster business transformation and upgrade and make an all-out effort to promote the coordinated development of the CHBN four major markets. It will also continue to optimize its revenue structure and strive to maintain growth in telecommunications services revenue for the full-year of 2020. The Group’s revenue from the sales of products and others went down by 34.9% year-on year to RMB12.4 billion for the first quarter of the year. The decline was mainly caused by contracted sales of handsets and IoT devices, amongst other products, due to COVID-19.

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The figures seem to vindicate arguments that China Mobile will prove fairly resilient to COVID-19 as a critical lifeline to the wider world for people under lockdown/ shelter in place orders. While customer numbers fell in mobile, there was no decline at China Mobile’s fixed-line business, which picked up another 4 million broadband customers to finish March with 191 million in total. On the mobile side, usage of traditional voice services fell from 278 minutes per user each month in the final quarter of 2019 to just 234 minutes in the first quarter of 2020. Mobile data usage, though, rose from 7.1 to 8.3 gigabytes per month over the same period.

Largely due to China government incentives, China Mobile now claims nearly 32 million 5G customers, up from just 2.6 million in December 2019. Sustain that rate of growth and the operator would be on course for almost 120 million 5G customers by the end of this year. That may be difficult once China Mobile has attracted all the early 5G adopters.  It will be interesting to see how soon the major improvements brought by 3GPP Release 16 (scheduled to be frozen in early July 2020) will be implemented by the Group’s network equipment vendors- principally Huawei and ZTE.

Signage for China Mobile Ltd. is displayed outside a store in Shanghai.

Key Insights From Bloomberg:

  • The carrier, which has more than 940 million subscribers, may benefit in the months ahead as economic activity begins to return toward normal. The expansion of 5G coverage planned this year may also help lure subscribers to higher priced heavy-data plans.
  • While the company is spending to expand 5G networks, it has also been maintaining dividend levels and had cash and bank deposits of about 317 billion yuan as of the end of last year.
  • Attracting 5G subscribers is a key for growth as those users tend to spend more per month. The company had about 31.7 million 5G subscribers as of the end of March.
  • While total subscribers fell in the first quarter, the carrier benefited from a slight rise in average revenue per user from the previous quarter as the introduction of 5G networks made it easier for users to play richer video games and use applications that consume more data.

Iian Morris, International Editor at Lightreading wrote in a blog post:

A challenge for the Group is to meet the investments required for 5G infrastructure.  China Mobile has earmarked RMB100 billion ($14.1 billion) for capital expenditure on 5G in 2020, an increase of 317% on what it spent in 2019, according to market-research firm Omdia (owned by market research goliath Informa). Its plan is to add at least 250,000 5G base stations by the end of this year.

Meeting this commitment will be difficult as earnings and cash flow are squeezed by COVID-19. Just-published figures show that earnings before interest, tax, depreciation and amortization fell nearly 6% in the first quarter, to RMB68.5 billion ($9.7 billion), compared with the year-earlier period. Under government pressure to hit deployment targets, China Mobile may look to reduce costs in other parts of the business to offset the increase in spending on 5G. “The group will continue to develop new sources of revenue and identify ways to curtail expenses, while taking measures to reduce costs and enhance efficiency,” it says in its statement.

Hacking into headcount will be difficult if China Mobile is to avoid disruption to 5G buildout and sales and marketing activities. Nevertheless, the operator may be able to realize some cost savings through pruning of a workforce that numbered as many as 456,239 employees at the end of last year. While major US operators have slashed tens of thousands of roles in recent years, China Mobile seems to have been a lot more cautious on the jobs side: Its staff numbers have fallen less than 1% since the end of 2016.

The latest update on 5G will be a further concern for US officials already worried about falling behind China in the development and rollout of the new network technology. With at least 30 million 5G customers, China already has enough users of the service to spur the development of new commercial applications that might not be feasible in the old 4G world. That is exactly what the US does not want to hear.

References:

https://www.chinamobileltd.com/en/file/view.php?id=228270

https://www.lightreading.com/asia/china-mobile-misplaces-4m-customers-but-finds-another-30m-for-5g/d/d-id/759007?

https://www.bloomberg.com/news/articles/2020-04-20/china-mobile-lost-almost-4-million-subscribers-in-first-quarter

China Telcos Lose Subscribers; 5G “Co-build and Co-share” agreement to accelerate

Decrease in China’s Mobile Subscribers:

China’s wireless carriers are reporting substantial drops in subscribers as the coronavirus crisis reduces business activity.

China Mobile Ltd., the world’s largest wireless carrier, reported its first net decline since starting to report monthly data in 2000.  China Mobile subscriptions fell by more than 8 million over January and February, data on the company’s website show.

China Telecom Corp. said it lost 5.6 million users in February, while China Unicom Hong Kong Ltd. subscribers fell by 1.2 million in January.

The across the board China subscriber slump indicates that the coronavirus pandemic crisis, which first emerged in China late last year, is crimping growth, even at businesses that provide essential services and earn monthly revenue.  ARPU will likely also decline, according to analysts.

Chris Lane, an analyst at Sanford C. Bernstein & Co said  that part of the decrease in wireless subscribers could be due to migrant workers — who often have one subscription for where they work and another for their home region — canceling their work-region account after the virus prevented them from returning to work after the Lunar New Year holidays which began in late January.

While the drop in users is unusual, the total is small relative to total wireless subscriptions, which have risen to a combined 1.6 billion for the three carriers.  Things may improve starting this month as work in factories and other businesses in China resumes, Lane said.

Net income fell 9.5% last year at China Mobile, partly on government mandates to cut prices and improve service, but also due to a spike in financing costs – up from RMB144 million ($20.2 million) to RMB3.25 billion ($460 million).

The company, which reported earnings last week, told analysts revenue would remain stable this year, a sign management was not worried about the fall in subscribers.

China Unicom overcame 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.

“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.

China Unicom 5G network

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Co-build and Co-share Agreement:

In September 2019, China Unicom entered into a cooperation agreement with China Telecom to jointly build one 5G access network across the country. China Unicom would be doubling it’s own 5G network coverage, bandwidth, capacity and transmission speed, providing users with better experience.

China Unicom said it will actively step up the “co-build and co-share” with China Telecom in areas such as 4G indoor distributed antenna systems, server rooms, optical fiber and pipelines to further enhance network advantages and corporate value.Image result for pic of china telecom

References:

https://www.bnnbloomberg.ca/china-s-mobile-carriers-lose-15-million-users-as-virus-bites-1.1410626

https://www.telecomlead.com/5g/china-unicom-reveals-5g-network-capex-plans-94530