China's three state-controlled telecommunications operators netted combined revenue last year of $172.9 billion, with the commercialization of 4G Long Term Evolution (LTE) and the wider deployment of broadband identified by the carriers as among their most important goals in future network upgrades, according to an IHS iSuppli China Research Telecommunications special report from information and analytics provider IHS.
The collective revenue in 2012 for China Mobile, China Unicom and China Telecom marked a 10.3 percent increase from a revenue level of $156.8 billion in 2011, which was also up a similar 10.0 percent from $142.5 billion in 2010.
Among the three, China Mobile had the largest share of takings at $94.5 billion, up 6.9 percent; followed by China Telecom with $43.9 billion, up 15.5 percent; and China Unicom with $34.5 billion, up 13.6 percent.
But despite its perch at the top, China Mobile actually lost some momentum in revenue growth compared its 10.7 percent rise in 2011, a loss ascribed to the high churn among its high- and middle-end subscribers. In contrast, the double-digit increases in growth this year for China Telecom and China Unicom marked the second such year of robust expansion for the two entities.
Overall, mobile users in China amounted to some 1.1 billion, up 13.8 percent for the year. While the legacy 2G technology continued to have a large base of new subscribers in China with 876.8 million additions for 2012, annual growth for new customers amounted to just 3.4 percent. In comparison, 3G subscribers surged 83.1 percent to 233.4 million, part of an encouraging trend in the country focusing on higher technology.
Twin goals for achieving expansion
A key event last year for the Chinese telecom industry was the release of the Telecom Twelfth Five-Year Plan, which laid out specific development targets within a four-year period until 2015. Among the goals was for the industry to achieve more than $241.9 billion in revenue by 2015 and to invest more than $323.0 billion in basic network infrastructure. The plan also called for the cultivation by 2015 of more than 450 million 3G users, 250 million broadband subscribers and 40 million fiber-to-the-home customers.
The three carriers have also set their sights on network upgrades as part of efforts to improve wireless access for all of China.
One important part of network upgrades involves the commercialization of a home-grown version of LTE known as TD-LTE, with the first licenses to be issued for use this year. China Mobile's TD-LTE plan, for instance, will deploy 200,000 base stations in more than 100 cities, covering upward of 500 million users by the end of this year. This means China Unicom and China Telecom will need to move quickly on their own if they wish to counter China Mobile's aggressive moves, IHS iSuppli believes, or risk being left behind. While TD-LTE smartphones won't reach maturity sooner than the second half of 2014, explosive growth will take place by 2015, resulting in some 440 million new LTE subscribers in China by 2017.
A second part of network upgrades is Broadband China, a project that seeks to increase fiber deployment in urban areas while improving the availability of broadband services in the rural areas. Broadband operators, however, realize the problem of a much longer Return on Investment (ROI) when it comes to fiber technologies, even though the initiative gets plenty of support from the government in Beijing. ROI rates for fiber could reach six to seven years in developed areas of the country, while 10 or more years could be the norm for ROI in the countryside.
Nonetheless, broadband service coverage is expected to blanket 95 percent of rural areas by 2015, and Internet access speeds in developed cities could reach up to 100 megabits per second by that time, up from just 4 megabits per second in 2012.