What Lies Ahead For The Chinese Wireless Market After A Strong July?

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July proved to be a relatively positive month for the Chinese wireless industry, with the three major carriers together adding about 4 million new subscribers, compared to about 3.6 million subscribers in June. While market leader China Mobile (NYSE:CHL) led the industry with 1.87 million net adds, China Telecom (NYSE:CHA), the smallest of the three wireless carriers, saw its subscriber expand by a strong 1.74 million – its second largest monthly performance of the year. This was likely driven by promotional activity, as well as an increasing focus on improving its 4G user base (5.7 million 4G adds/migrations for the month).

CHA_CHU_CHL_July

While we expect China Mobile to remain the leader in terms of net adds going forward, on account of its stronger coverage (1.32 million 4G base stations) and marketing, it is possible that it could face mounting pressure from its smaller rivals, who have been steadily improving coverage. China Telecom intends to improve its 4G base station footprint to 850k by the end of this year (up 350k y-o-y), while China Unicom (NYSE:CHU) intends to bolster its footprint to 680k base stations (up 280k y-o-y). Moreover, the two carriers also intend to share some network infrastructure in order to speed up construction and cut costs.

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