Sending a signal

China Mobile and CBNC partner on 5G drive


Governments around the world are working out how to get children back to school safely and stop Covid-19 from spreading again. In China these efforts have included the rollout of infrared temperature measuring devices to schools in Hubei province, run on a 5G network by China Mobile. During the lockdown other 5G networks helped online education providers broadcast millions of classes. Both cases are examples of how 5G could reshape everyday life as the next-generation standard is more widely deployed.

The country’s big three telecom carriers are already under intense pressure to accelerate the rollout, in part to help the economy recover faster from the pandemic but also to keep China at the forefront of the 5G race. The technology is a core component of the government’s latest round of infrastructure initiatives, through which it hopes to transform the economy. The target is 600,000 5G base stations by the end of his year, rising to as many as 5.5 million by 2025.

In late May China Mobile took an important step in its own 5G rollout when it announced a partnership with the country’s fourth 5G operator, China Broadcasting Network Corp (CBNC). The national television and radio network operator was awarded a fourth 5G licence in January in an attempt to create more competition for the major carriers and to speed up the transition from watching TV to interacting with it: i.e. seeding technologies such as augmented reality.

In March, CBNC also announced plans to form a company that unites the provincial cable TV operators around the country, as well as introducing strategic investors.

The tie-up between China Mobile and CBNC is more wide-ranging than the one that China Telecom and China Unicom forged last September. The two telcos have talked more about reducing 5G capex costs by building and owning base stations together. They say they are on track to install 250,000 of them by the end of the third quarter (China Mobile is aiming for 300,000).

China Mobile and CBNC have gone further in their deal, which is scheduled to last until 2031. It sees the two construct base stations on a 1:1 basis, with China Mobile in charge of subsequent operations and maintenance. But these base stations will be aligned to CBNC’s 700MHz spectrum, which sits at a lower frequency than the other three licence holders. This spectrum has higher propagation than higher frequency ones, making it better suited for rural areas and requiring fewer base stations in support.

Access to the lower spectrum will also help China Mobile. In return, CBNC is getting access to China Mobile’s 2G, 3G and 4G spectrum on a paid-for basis.

It’s being billed as a win-win partnership and it seems to have impressed investors. China Mobile’s stock price has lost about a sixth of its value so far this year, which is in line with the Hang Seng Index. By comparison, China Telecom’s shares are down a quarter and China Unicom’s have dropped 40%.

At the end of the first quarter China Mobile was reporting 31.7 million 5G subscribers. But the stand-out figure is the percentage gain: up 1,144% quarter-on-quarter. It is targeting 70 million 5G subscribers by the end of the year.

China Telecom reported 16.61 million subscribers. China Unicom did not release a figure but analysts believe it is three to four million.

The focus is now on widening 5G coverage across China and getting the subscriber numbers higher. Over the short term, the operators aren’t likely to be affected by Washington’s tightening hold on US component supply to Huawei. Huawei has also been stockpiling as many key parts as it can. Guo Ping, its current revolving chairman, said recently that inventory levels were up 73% year-on-year to Rmb167.4 billion ($23.6 billion).

Zhang Yunyong, chairman of China Unicom’s Research Institute, says that the Chinese telcos are expected to invest Rmb1.2 trillion in 5G networks through to 2025, while spending on data will top Rmb2 trillion. He told Tencent News: “Such a gigantic investment will help spur economic growth, fuel the development of the digital economy and create sound telecommunications infrastructure to upgrade manufacturing.”

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