How Did The Chinese Broadband Market Trend During The First Half Of 2016?

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CHA: China Telecom logo
CHA
China Telecom

Broadband internet services have become a major focus area for Chinese telecom companies as they look to offset declines in their landline phone businesses, while taking advantage of China’s Internet Plus policy, which aims to drive the economy via an all-digital strategy.  The country had a total of 278 million fixed broadband connections at the end of June, with household fixed broadband penetration rising to about 57%. [1] The tier-1 players – China Telecom (NYSE:CHA), China Unicom (NYSE:CHU) and China Mobile (NYSE:CHL) – together control over 90% of the market.  Below we take a look at how they performed over H1 2016.

China_Broadband_1

  • China Mobile added about 10.8 million new subscribers (62% share of the net adds for tier-1 carriers) during H1. Although the carrier is a relatively late entrant into the wireline broadband space, it has been adding customers at a rapid clip, driven by its competitive pricing as well as opportunities for providing bundled services to its 830 million+ wireless users. That said, the carrier’s ARPU remains the lowest among tier-1 players, at about RMB 33 ($5) – roughly 40% below China Telecom.
  • China Telecom, which primarily provides services in the southern part of the country, continues to lead the market with about 118 million subscribers. The carrier’s ARPU remains higher than its peers on account of a stronger mix of fiber-to-the-home users and an increasing emphasis on value-added services such as IPTV and Video-On-Demand. That said, ARPU declined year-over-year, likely driven by tariff adjustments and a move to upgrade broadband speeds for mainstream customers (50/100 Mbps).
  • China Unicom, the second largest player mainly provides broadband services in Northern China. The carrier’s net adds were the weakest among major players, potentially driven by stronger competition. The carrier’s ARPU also saw a slight decline year-over-year.

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Notes:
  1. China’s broadband penetration jumps in H1, Mobile World Live, August 2016 []