Bringing Debt Down
A nationwide audit raises alarms over risks from local government debts
Current Issue
· Table of Contents
· Editor's Desk
· Previous Issues
· Subscribe to Mag
Subscribe Now >>
Expert's View
Market Watch
North American Report
Government Documents
Expat's Eye
Photo Gallery
Reader's Service
Learning with
'Beijing Review'
E-mail us
RSS Feeds
PDF Edition
Reader's Letters
Make Beijing Review your homepage
Hot Links

cheap eyeglasses
Market Avenue

Top Story
Top Story
UPDATED: January 16, 2014 NO. 3 JANUARY 16, 2014
Fourth Generation
China Mobile is ready to make up for lost ground in partnership with Apple
By Deng Yaqing

"Without a doubt, the teaming up of the iPhone and China Mobile will put pressure on the domestic vendors that have gathered the courage to penetrate into the high-end market," said Liu Zhenghao, an industry analyst.


As one of the 4G standards recognized by International Telecommunication Union, LTE has two variants—TD-LTE, the upgraded version of the homegrown TD-SCDMA standard and FDD-LTE, which is more popular worldwide.

Aside from TD-LTE, the MIIT said it will also issue licenses for FDD-LTE when the time is ripe.

For consumers, 4G means faster mobile Internet speed, higher definition videos and more applications. For telecom operators, having a foothold in the market will bring about more business opportunities and a rise in profitability.

When 3G licenses were issued in 2009, China Mobile was designated to promote the homegrown TD-SCDMA network, while China Unicom and China Telecom received permission to use the WCDMA and CDMA2000 standards.

Faced with an incomplete TD-SCDMA industrial chain, China Mobile lost millions of customers to China Unicom and China Telecom. Despite the fact that it has more than 100 million users, the utilization rate of its 3G network is lower than 15 percent in many provinces. According to its 2012 financial report, only one quarter of data traffic came from its 2G and 3G networks.

Now, it's time for China Mobile to make a turnaround. At the 2013 China Mobile Global Partner Conference, the telecom giant showed its ambition when it revealed its plan to build more than 500,000 4G network base stations.

The costs of large-scale network construction will weigh on profits. Colin McCallum, an analyst from Credit Suisse, said that the expectation of China Mobile's net profit and target share price would be reduced by 9.1 percent and 6 percent, respectively, in 2014.

Beyond that, cellphone subsidies will also erode margins. McCallum believed the deal between China Mobile and Apple will push the former to invest another 5.3 billion yuan ($875 million) into subsidies for iPhones.

"Not counting in expenditures like network maintenance, it will still take nearly 100 billion yuan ($16.5 billion) to complete the 4G network's construction," said telecommunication analyst Fu Liang.

A potential reshuffle

Apple's brand status and China Mobile's 4G preemptive move will generate a synergy, which will squeeze the two other major operators' presence in the high-end market, said Yang Qun, chief analyst of Warring Strategy Public Relations.

Nonetheless, it doesn't mean hordes of consumers will immediately switch to the new 4G network. According to iiMedia Research, in November 2013, the numbers of 3G and 2G network users were 380 million and 837 million, respectively. This shows that in the past five years of 3G's existence in China, many consumers were still glued to the original 2G network. In this way, China Unicom, which has maintained a predominant position in the 3G era, will stay on top for the time being.

Due to the need of integrating FDD-LTE with TD-LTE, China Unicom still attaches great importance to the network construction of the FDD-LTE, which is more widely accepted globally.

In an interview with China Central Television in December 2013, China Unicom President Lu Yimin noted that the company is aiming for a smooth and seamless upgrade from 3G to 4G. Apparently, as the most popular operator favored by high-end consumers in the 3G era, China Unicom is unlikely to cede market share to its biggest opponent.

China Telecom has to invest hugely in building up its 4G network. Owing to the relatively high customer loyalty brought by its mature 3G mobile network, China Telecom has time to breathe and catch up.

Qi Feng, Senior Vice President of D-Phone, a Chinese retailer of mobile phones and accessories, said 3G mobile phones still accounted for 91.2 percent of total sales during New Year's Day.

"The orders for China Mobile iPhone 5S and 5C are 60 percent less than that of China Unicom. Many consumers still take a skeptical attitude toward 4G products. After all, it is still a novelty," said Qi.

Email us at: dengyaqing@bjreview.com

   Previous   1   2  

Top Story
-The Future of Abenomics
-Special Coverage: Abe's Controversial Shrine Visit
-Onset of 4G Era
-A Speedier Era
-Illuminating Hope for Peace
Related Stories
-Onset of 4G Era
Most Popular
About BEIJINGREVIEW | About beijingreview.com | Rss Feeds | Contact us | Advertising | Subscribe & Service | Make Beijing Review your homepage
Copyright Beijing Review All right reserved