China's Mobile Communications
Equipment Revenues Hit 20.4 Billion Yuan In 1H08 September 25, 2008
By the end of June 2008,
China's mobile phone users exceeded 600 million. Telecom operator China
Mobile alone grew 9.1 million new subscribers each month. China's mobile
communications industry continues its rapid development.
In 1H 2008, China's mobile
communications equipment revenues reached 20.37 billion Yuan. CCID
Consulting expects GSM equipment purchases alone to exceed 10 billion Yuan
by the end of 2008. China Mobile continues its large investments in its GSM
network, while GSM network deployment has been China Unicom's key focus.
China Telecom plans on expenditures of 10 billion Yuan on CDMA equipment.
Source: CCID Consulting, July 2008
China's domestic 3G
networks pushes forward.
China Mobile continues its
TD-SCDMA trials. By the end of June 2008, its TD-SCDMA subscribers numbered
52,000, while its commercial users exceeded 8,000.
However, TD-SCDMA still has
its challenges. 3G is high-end and expensive. Existing networks are
fragmented and could not support its high-end users with seamless and
consistent coverage. Loss of TD-SCDMA signals will automatically revert to
GSM, which does not provide users the needed service levels.
In 2H08, China Mobile will
initiate its second round of equipment bids. Relative to its first round,
this round will focus more on construction rather than trials. CCID expects
spending to reach 10 billion Yuan in 2H08.
restructuring have left the newly reorganized operators with the following
mobile communications base station snapshot: China Mobile's GSM base
stations exceed 300,000; China Unicom's GSM base stations number 40,000,
while China Telecom has 40,000 CDMA base stations.
As China Mobile is expected
to increase its network investment, it will serve to spur a new round of
equipment purchases by the other telecom operators, as all operators will
focus on competitively building out their own mobile communications
Given that China Mobile far
outpaces China Unicom in terms of GSM base stations (as one indicator),
China Unicom will regardless focus in building its G- networks. China Unicom
may also opt to adopt more mature WCDMA to develop its 3G services.
Excluding CDMA, China
Telecom is at a disadvantage in terms of mobile network resources and
subscribers. CCID Consulting expects China Telecom to invest heavily into
their CDMA networks in the next two to three years to support anticipated
subscriber and income growth. Moreover, CCID Consulting expects CDMA
subscriber growth to be at 25% CAGR.
rankings remains at status quo in 1H08.
Vendors still have narrow
to negative profit margins on equipment itself, as telecom operators'
average equipment spending ranges between 22K to 23K Yuan. However, telecom
operators pay additional fees on integration and service. For GSM equipment,
Ericsson, Huawei, Nokia Siemens and Alcatel-Lucent are the leaders, taking a
combined 80% in market share. For CDMA, ZTE leads, followed closely by
Alcatel-Lucent and Huawei.
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Unless otherwise specified,
all information provided is sourced from CCID Consulting.