The next round of wireless infrastructure investment in China will peak in 2014 when Chinese wireless operators spend $6.3 billion of their capital expenditure budgets on Long Term Evolution (LTE) equipment, according to a new China Research topical report from information and analytical provider IHS Inc.
Chinese mobile carrier capital expenditures on mobile equipment last crested at $13.3 billion in 2009 as three 3G networks deployed on a large scale. The projected new high in spending won't match the earlier level, given the $11.9 billion forecast to be spent on wireless infrastructure equipment in 2014.
The bulk of new expenses will come from LTE spending of $6.3 billion, nearly double the equipment spending on LTE that will take place this year of $3.6 billion. Another $6.0 billion in capital expenditures for LTE will take place in 2015, followed by $5.1 billion in 2016 and $5.9 billion in 2017.
From 2013 to 2017, IHS forecasts total capital expenditures for LTE wireless infrastructure will amount to $26.9 billion. By the end of 2017, China Mobile will deploy 600,000 TD-LTE base stations, while China Unicom will acquire the LTE FDD 1800-megahertz (MHz) license and build around 300,000 base stations. The third major carrier, China Telecom, will get its LTE TDD/FDD license at 2600MHz/2100MHz and will construct 400,000 base stations.
This year, the three big Chinese telecommunication operators' capital expenditures are budgeted at $61.6 billion, representing an increase of 6.4 percent from 2012. In terms of the spending on the construction of mobile networks, the budget will reach $24.3 billion, up 11.5 percent from 2012.
Although its LTE license has not yet been issued so far in the first half year of 2013, China Mobile plans to invest $5.7 billion in TD-LTE moving forward. For its part, China Telecom is taking a $1.6 billion allowance into consideration as a reserve for LTE development. Meanwhile, China Unicom is not considering an LTE budget in its preliminary capital expenditures plan, but the company will make an additional LTE investment if a LTE license can be issued before the fourth quarter of this year
A good first quarter
In the first quarter, China's mobile market continued on a path of stable growth. Revenue from its mobile business segment made up 71.3 percent of the company's takings, rising 10.9 percent year-over-year. Moreover, mobile subscribers increased by 13.1 percent to 1.15 billion, including 280.3 million 3G users. The country's wireless base stations also grew to 2.4 million, including the addition of more than 590,000 transceiver (TRX) stations during the period.
Continuing into 2013, the most significant change will be mobile users moving from 2G to 3G, after which 2G in China enters a period of negative growth.
China Mobile has been aggressively transferring its 2G GSM users to its 3G TD-SCDMA network since late 2012. Its market share of new 3G subscribers was far ahead of its rivals in the first quarter, even though it is in second place in terms of mobile user development. Most TD-SCDMA users have upgraded from its GSM user base.
China Unicom maintains rapid growth in 3G WCDMA user development, which has helped it achieve first place in new mobile subscribers. China Telecom is also employing a consistent marketing strategy and is maintaining stable growth in 3G subscribers, but its market share has been lagging far behind those of its rivals.
Read more >> Chinese Mobile Operators Prep for LTE