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704 Million LTE Subscribers and Counting |
NEWS |
Full 2016 numbers for China’s three mobile telcos are not out yet, as it is early January 2017. However, based on the latest telco metrics, leading up to the end of October 2016, the numbers are eye-popping. China’s three largest mobile telecom operators ended October with approximately 704 million LTE subscribers. Total subscriptions (2G, 3G, and 4G) stood at 1.32 billion, which means 53.2% of China’s mobile subscribers are on LTE. Commercial LTE services only started three years ago. Indeed, out of that 704 million, 41% or 289 million were added in the first 10 months of the year.
Breaking the numbers down further:
Making It Happen |
IMPACT |
China, of course, is not a small country. It has a landmass of 9.6 million Km2 and a population of 1.4 billion. Taking China Mobile, for example, in the first half of 2016, the operator deployed an additional 200,000 LTE basestations taking its total LTE base-station count to a whopping 1.32 million base-stations. A large part of the mobile telco’s capital expenditure has been on improving coverage inside buildings, as well as VoLTE and carrier aggregation (present in 300 cities). China Mobile spent US$12 billion in 1H 2016 on capex. The telco is also using some of that investment to carry out network function virtualization upgrades. ABI Research estimates LTE ARPU was around US$22 per user per month. This figure is 2.5X lower than in the U.S., but it still netted China Mobile US$9.4 billion in LTE service revenue in the 1H-2016.
LTE is Empowering China’s Smart Cities |
COMMENTARY |
Where does China’s LTE market go in 2017? The LTE adoption rate could potentially pass 65% by the end of 2017. The majority of customers do not get a subsidized handset from their mobile telco. However, Chinese end-users are jumping on the LTE smartphone bandwagon. Not limited to end-users, China is rapidly becoming a very significant IOT/M2M market, in its own right. Beijing and local government are spearheading a number of smart city initiatives such as: Zhenjiang’s smart city buses; Wuxi’s smart cloud and super-computing data-centers, and Wuhan has set up a municipal administrative service center, which provides 24-hour self-service public service that is available via smartphones or PCs. The government is also aggressively promoting its Internet+ campaign. The Internet+ campaign intends to integrate the Internet with a range of traditional businesses in order to generate new opportunities such as the Internet+Manufacturing Industry, Internet+Finance, Internet+Medical System, etc. China Mobile, China Telecom, and China Unicom are not just trying to put the smartphone at the center of that experience; they are also complementing it with a range of digital applications that target that Internet+ vision.
China may not have the U.S.’s per capita discretionary spending. However, it became a significant market player in the mobile arena and will likely have a major influence in the future outlook of 5G.