The State of The Chinese Wireless Market In October

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China Mobile

The three Chinese carriers recently published their October customer metrics, indicating that the Chinese wireless market (excluding MVNOs) expanded by roughly 2 million subscribers, with subscriber migration to high-speed data services (3G and 4G) coming in at a strong 18 million. While China Mobile (NYSE:CHL) and China Telecom (NYSE:CHA) posted their second-best number of high-speed customers adds since the launch of their respective 4G networks, China Unicom (NYSE:CHU) – the second largest carrier – continued to see some headwinds, with subscriber attrition and a moderation in the rate of its high-speed additions. Here’s a quick round-up of the state of the Chinese wireless market in October.

See our complete analysis of China MobileChina UnicomChina Telecom

China Mobile

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China Mobile, the largest wireless carrier by far, continued to witness reasonable growth, with its total subscriber base growing by about 1.07 million and its 4G subscriber adds coming in at 19.69 million. [1]  The carrier now has a total of 267 million 4G users and 824 million total subscribers. While there’s still more room for high-speed growth – as Mobile’s high-speed mix stands at about 55%, below smaller rivals Telecom and Unicom – there could be some near-term factors such as improved 4G LTE services by the smaller two players that could reduce the supply of subscribers migrating to China Mobile on the basis of its superior LTE data speeds and coverage.

China_Wireless_Oct

China Telecom

China Telecom added 2.3 million high-speed customers and a net of 1.2 million subscribers for the quarter as its strategy of focusing its initial 4G TD-LTE network build-out in densely populated urban areas continues to pay off. [2]  The carrier might also be benefiting from the weakness at key rival China Unicom, which continues to see subscriber defections. The strength could continue going forward, as Telecom is expected to be one of the biggest beneficiaries of the tower sharing joint venture it has formed along with China Unicom and China Mobile. The venture would give it access to a larger base of tower infrastructure, helping to quickly and effectively enhance its 4G network roll-out – particularly in suburban and rural areas.

China Unicom

China Unicom lost a total of 306k customers during October, while its high-speed additions (3G/4G) came in at the lowest levels since May 2015. [3] While China Unicom set an ambitious goal of building out its 4G coverage all across the mainland, it ended up spreading its 4G deployment too thin, since it could not afford the sort of density that its larger and better-capitalized rival China Mobile achieved. However, there is some hope for a turnaround. Firstly, 4G in China is still in its early stages and we estimate that penetration stands at less than 30%, and Unicom has a large base of 3G subscribers who could migrate to 4G services.  Secondly, the tower sharing venture could help alleviate infrastructure and cost concerns as the company ramps up its 4G roll-out.

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Notes:
  1. China Mobile Operating Data []
  2. China Telecom Key Performance Indicators []
  3. China Unicom Operating Data []