Page 346 - 2018 White Paper on the Business Environment in China
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8 White Paper on the Business Environment in China
highly fragmented. Many still operate at the city level, times that of China Telecom and 26 times that of China
while others have consolidated into provincial-level Unicom. From the 4G market share, China Mobile is
operations,” Bernstein Senior Analyst Chris Lane said. still the largest, with its 4G users reaching 594 million,
Their infrastructure spending also pales in comparison while China Unicom and China Telecom only take 23.4
with the huge annual capital expenditure of the three percent and 25.6 percent, respectively, of the market.
major telecommunications carriers, which continue to From the growth point of view, China Telecom’s 4G
build up their advanced mobile and fixed-line broadband users are the fastest growing, with its total number
services. “China Telecom has now more IPTV subscribers of users outnumbering that of China Unicom. In the
than any of the cable operators,” Lane said (Perez). fixed-line broadband development, China Telecom still
maintains to be the Big Brother. In the first half of 2017,
China Telecom has delivered unwelcome news to China Telecom’s cable broadband subscribers reached
its equipment suppliers, announcing plans to slash 128 million, a year-on-year increase of 4.98 million, of
capital expenditure by as much as 8 percent in 2017. which fiber-optic broadband subscribers reached 117
The service provider said in an earnings update that million, a net increase of 11.24 million over the end of
it would spend about 89 billion yuan in 2017, with 73 2016. China Mobile is the second biggest player, with its
percent of that figure earmarked for investment in 4G mobile fixed-line customers showing a net increase of
and fiber networks. The operator plans to add another 15.42 million, reaching 93.04 million users. It is expected
2.7 million 4G base stations to its footprint, which that its cable broadband customers will exceed 100
included about 1.16 million base stations at the end million by the end of 2017 (Yoo). In 5G development,
of 2016. It is also prioritizing the rollout of NB-IoT, a the three major telecom operators are launching field
network technology designed to provide connectivity experiment and putting R&D efforts. China Unicom said
for smart meters and other machine-based devices in the interim report, that the company is launching
that transmit small amounts of bandwidth on a regular 5G network field test in cities, and is jointly developing
basis. The capital expenditure (CAPEX) forecast may not 5G applications and solutions with its partners. China
come as a big surprise to equipment vendors, which Mobile launched a 5G field experiment in 2018 and
have spoken frequently about the slowdown in China’s said it will start the construction of mobile networking,
maturing 4G market, but it follows a similarly sharp to speed up the Software Define Network (SDN) and
reduction in investment activity in 2016, when CAPEX Network Function Virtualization (NFV) to bring the next
fell 11.3 percent, to 96.8 billion yuan. China Telecom generation of cloud network transformation in 346 cities
has been looking to cut costs partly through a network- in China. China Telecom announced the company’s 5G
sharing deal with China Unicom, which has seen the two network field test in 6 cities (Yoo).
companies pool 4G and optical resources. Both players
have been under considerable pressure from market The largest mobile Internet companies in China
leader China Mobile, which has rapidly become the will derive over 30 percent of their total revenue from
dominant service provider in the country’s flourishing overseas markets. Moreover, Chinese in-country online
4G market (Morris). retail transactions will reach around $1.5 trillion by 2019,
according to the latest market study by International
China’s three major telecom operators released Data Corporation. “Entering 2017, China’s Internet
2017 interim results report on the first half of the year industry formally bids farewell to the fast growth of
in August. They recorded an average daily net profit of recent years, making an overall transition from an
about 429 million yuan, which China Mobile accounted incremental market to a saturated market,” said Xue Yu,
for 80 percent of them. In terms of 4G development, Senior Analyst at International Data Corporation (IDC).
China Mobile outshines the market in both the number However, emerging technologies such as ARTIFICIAL
of users and the net increase of the users. In the fixed- INTELLIGENCE, Internet of Things and AR/VR have yet
line broadband, China Telecom is still the largest by far, to reach the stage of large-scale commercialization and
but China Mobile is growing its users base with fierce thus hold huge growth potential (Deans).
momentum. In terms of net profit, China Mobile is
far ahead of the others: China Mobile recorded a net Software
profit of 62.7 billion yuan, an increase of 3.5%, 4 times
bigger than the combined net profit of China Telecom China’s software and information technology services
and China Unicom. China Mobile’s profitability is 5 industry continued to run smoothly; business income
346
highly fragmented. Many still operate at the city level, times that of China Telecom and 26 times that of China
while others have consolidated into provincial-level Unicom. From the 4G market share, China Mobile is
operations,” Bernstein Senior Analyst Chris Lane said. still the largest, with its 4G users reaching 594 million,
Their infrastructure spending also pales in comparison while China Unicom and China Telecom only take 23.4
with the huge annual capital expenditure of the three percent and 25.6 percent, respectively, of the market.
major telecommunications carriers, which continue to From the growth point of view, China Telecom’s 4G
build up their advanced mobile and fixed-line broadband users are the fastest growing, with its total number
services. “China Telecom has now more IPTV subscribers of users outnumbering that of China Unicom. In the
than any of the cable operators,” Lane said (Perez). fixed-line broadband development, China Telecom still
maintains to be the Big Brother. In the first half of 2017,
China Telecom has delivered unwelcome news to China Telecom’s cable broadband subscribers reached
its equipment suppliers, announcing plans to slash 128 million, a year-on-year increase of 4.98 million, of
capital expenditure by as much as 8 percent in 2017. which fiber-optic broadband subscribers reached 117
The service provider said in an earnings update that million, a net increase of 11.24 million over the end of
it would spend about 89 billion yuan in 2017, with 73 2016. China Mobile is the second biggest player, with its
percent of that figure earmarked for investment in 4G mobile fixed-line customers showing a net increase of
and fiber networks. The operator plans to add another 15.42 million, reaching 93.04 million users. It is expected
2.7 million 4G base stations to its footprint, which that its cable broadband customers will exceed 100
included about 1.16 million base stations at the end million by the end of 2017 (Yoo). In 5G development,
of 2016. It is also prioritizing the rollout of NB-IoT, a the three major telecom operators are launching field
network technology designed to provide connectivity experiment and putting R&D efforts. China Unicom said
for smart meters and other machine-based devices in the interim report, that the company is launching
that transmit small amounts of bandwidth on a regular 5G network field test in cities, and is jointly developing
basis. The capital expenditure (CAPEX) forecast may not 5G applications and solutions with its partners. China
come as a big surprise to equipment vendors, which Mobile launched a 5G field experiment in 2018 and
have spoken frequently about the slowdown in China’s said it will start the construction of mobile networking,
maturing 4G market, but it follows a similarly sharp to speed up the Software Define Network (SDN) and
reduction in investment activity in 2016, when CAPEX Network Function Virtualization (NFV) to bring the next
fell 11.3 percent, to 96.8 billion yuan. China Telecom generation of cloud network transformation in 346 cities
has been looking to cut costs partly through a network- in China. China Telecom announced the company’s 5G
sharing deal with China Unicom, which has seen the two network field test in 6 cities (Yoo).
companies pool 4G and optical resources. Both players
have been under considerable pressure from market The largest mobile Internet companies in China
leader China Mobile, which has rapidly become the will derive over 30 percent of their total revenue from
dominant service provider in the country’s flourishing overseas markets. Moreover, Chinese in-country online
4G market (Morris). retail transactions will reach around $1.5 trillion by 2019,
according to the latest market study by International
China’s three major telecom operators released Data Corporation. “Entering 2017, China’s Internet
2017 interim results report on the first half of the year industry formally bids farewell to the fast growth of
in August. They recorded an average daily net profit of recent years, making an overall transition from an
about 429 million yuan, which China Mobile accounted incremental market to a saturated market,” said Xue Yu,
for 80 percent of them. In terms of 4G development, Senior Analyst at International Data Corporation (IDC).
China Mobile outshines the market in both the number However, emerging technologies such as ARTIFICIAL
of users and the net increase of the users. In the fixed- INTELLIGENCE, Internet of Things and AR/VR have yet
line broadband, China Telecom is still the largest by far, to reach the stage of large-scale commercialization and
but China Mobile is growing its users base with fierce thus hold huge growth potential (Deans).
momentum. In terms of net profit, China Mobile is
far ahead of the others: China Mobile recorded a net Software
profit of 62.7 billion yuan, an increase of 3.5%, 4 times
bigger than the combined net profit of China Telecom China’s software and information technology services
and China Unicom. China Mobile’s profitability is 5 industry continued to run smoothly; business income
346
