Text size:

  • Small
  • Normal
  • Large
The pace of new mobile subscriptions has slowed in China, but overall industry revenue still rose 7.9% in the first five months of the year. Bobby Yip / Reuters
The pace of new mobile subscriptions has slowed in China, but overall industry revenue still rose 7.9% in the first five months of the year. Bobby Yip / Reuters

Big numbers in mobile expansion – especially in China

China is the world's largest mobile phone market by subscribers and it continues to expand, albeit at a slower level than before.

Beijing // One evening in 2004, the central organisation department of China's ruling Communist Party reshuffled the top executives at the country's top telecoms groups.

Overnight, the chief execs at the country's Big Three - China Mobile, China Unicom and China Telecom - were swapped around.

All three are listed companies and yet the party was able to shift them without pausing for breath - not something you can picture happening in the West - imagine AT&T, Verizon and Comcast all swapping CEOs.

It is a valuable insight into how the telecoms sector works in China, with each of the big players very much an integral part of the broader Communist Party machine.

The restructuring of the Chinese telecoms market was stepped up in earnest in 2008, when China Unicom merged with China Netcom, and China Telecom received a mobile licence.

China is the world's largest mobile phone market by subscribers and it continues to expand, albeit at a slower level than before. The market posted a 0.9 per cent monthly increase in the number of mobile subscribers to 1.165 billion in May, according to data published last month by the ministry of industry and information technology, an increase of 53 million.

In the first five months of this year, telecoms revenue grew by 7.9 per cent to 569.57 billion yuan (Dh340.68bn) compared with the same period last year.

In May, there were 10.39 million new subscribers, of whom China Mobile claimed 4.6 million to bring its total mobile user base to 735.2 million.

China Mobile dominates but it lost ground to China Unicom as it could not reach agreement with Apple over use of the iPhone. The rise of Samsung and domestic brands have enabled China Mobile to increase market share again.

China Unicom reported a net addition of 3.74 million new mobile subscribers last month, bringing its total to 258.4 million. China Telecom added 2 million new mobile subscribers during the month, taking its total to 172.2 million.

The telecoms sector seems to be leading the way among large Chinese firms in terms of improving overseas investment and it is becoming more internationally focused. This is being recognised overseas.

In its 2013 All-Asia Executive Team, Institutional Investor magazine named China Telecom as the most honoured company in Asia, while the head of the firm, Wang Xiaochu, was named the top chief executive in the telecoms category by both buy and sell-side analysts. Its chief financial officer Wu Andi won similar plaudits and its investor relations team even won best in sector.

Until April, China Telecom had reported a decline in quarterly profit since the chairman Wang Xiaochu began selling the iPhone in March last year, in a bid to gain ground on China Mobile and China Unicom. China Telecom is beginning to benefit from the increase in users of the third-generation service, said Eva Yip, an analyst at Sun Hung Kai Financial.

"The iPhone helped China Telecom to lure more high-revenue users from competitors," Ms Yip told Bloomberg News. "The proliferation of smartphones, including the iPhone, is helping stimulate data usage and data revenue."

China Telecom said last year when it started sales of the iPhone that the device would help it achieve long-term sustainable growth even as it causes "short-term pressure" on profitability.

Sales in the first quarter rose 15 per cent to 77.8bn yuan from 67.9bn yuan. "Services like internet access and data services continued robust growth," Mr Wang said.

The telecoms equipment manufacturer Huawei is also a name to be reckoned with when discussing the market.

Sweden's Ericsson currently has the biggest slice of the global mobile equipment market with about 35 per cent, but Huawei has 17 per cent, while NSN has 15 per cent and Alcatel-Lucent 12 per cent.

Huawei has been effectively shut out of the US market, the world's biggest for telecoms equipment, with US policymakers complaining about perceived links to the Chinese government and military.

The big news in Chinese telecoms these days is fourth-generation, or 4G, mobile networks and the official issuance of 4G licences is expected soon.

China Mobile, China Unicom and China Telecom plan to spend a combined 345bn yuan this year on network upgrades. That includes investment in 4G.

China Mobile has been the chief promoter of the domestic time division-long term evolution, or TD-LTE, 4G technology and it plans to plough 41.7bn yuan this year into 200,000 4G base stations to provide services for its customer base.

In May, the long-awaited 4G services, which provide mobile users with internet access 20 to 50 times faster than 3G network, made their debut in Shanghai when China Mobile began large-scale trials.

China Mobile said it planned to expand the 4G network to 100 cities this year with 200,000 base stations, covering 500 million people.

The number of handsets using TD-LTE is limited because the system is almost solely used in China, and most popular smartphones, like the iPhone 5 and Samsung Galaxy 4, don't support TD-LTE.

But Samsung's models will support China's 4G technology later. The next generation of iPhone will also support 4G.

More than 44 LTE 4G networks operate in 28 countries and China Mobile's 4G network will be the first on the China's mainland.

China Mobile will boost capital spending by 50 per cent this year on building 4G networks.

Its capital spending may rise to 190.2bn yuan this year, up 49 per cent year on year.

"China will blow everything else away in terms of volume this year," said David Geary, the head of Alcatel-Lucent's wireless division.

Of the 1.17 billion mobile users, 3G mobile users account for 300 million, almost close to 70 per cent of the whole net increase last year.

In line with the rest of the world, fixed line business is tanking. Between January and May, landline phone users were 274 million, a decrease of just over four million.

But 4G means the mobile future is secure, regardless of who is at the helm of China's Big Three.

 

business@thenational.ae

Back to the top

More articles


Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Miele coffee maker making Cappuccino at Miele Gallery in Sama Tower in Dubai. The cost of this coffee maker is around Dh 17,000. Pawan Singh / The National

Space-age coffee comes at a price from Miele

Miele have taken the coffee machine to a new level with its Dh17,000 offering that is built into your kitchen.

 The bridge of Seajacks Hydra, as the wind farm installation vessel undergoes finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014. Jeffrey E Biteng / The National

In pictures: Building the Seajacks Hydra

The Seajacks Hydra, a wind farm installation vessel, is undergoing finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 The rush of new supply of hotel rooms pushed Dubai occupancy rates down to 87 per cent. Sarah Dea / The National

Dubai hotel room rates rise 10 per cent

The rush of new supply pushed occupancy rates down to 87 per cent, a dip of 2.6 per cent from the previous year. Winter months are the strongest for Dubai hotels, with occupancy and prices falling to half their peaks by July.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National