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China’s LTE Capex Sinks 16 Percent Year-over-Year Owing to China Unicom-China Telecom Network Sharing Deal

China’s LTE Capex Sinks 16 Percent Year-over-Year Owing to China Unicom-China Telecom Network Sharing Deal

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By Stéphane Téral, senior research director and advisor, mobile infrastructure and carrier economics, IHS Markit

 

Highlights

  • In China, the 2G, 3G and LTE (Long Term Evolution) mobile infrastructure market decreased 9 percent in 2016 from 2015, to US$12 billion
  • A network sharing deal between China Unicom and China Telecom drove LTE capex down 16 percent year-over-year in 2016
  • The Chinese mobile infrastructure macro hardware market is forecast to decline at a -34 percent CAGR (compound annual growth rate) from 2016 to 2021

Our Analysis

China, the world’s largest mobile subscriber base, had a total of 1.3 billion subscribers in 2016, 64 percent of them on China Mobile’s GSM/TD-SCDMA/LTE network. Fifty-eight percent of China’s mobile subscribers are now on LTE, up from 32 percent in 2015.

 

In 2016, a network sharing deal between China Unicom and China Telecom drove LTE capex down 16 percent year-over-year. However, the combination of both companies’ addition of FD-LTE (frequency division LTE) eNodeBs and China Mobile’s moderate TD-LTE (time division LTE) rollouts led to a combined total of 1,020,000 eNodeBs deployed—the same number as in 2015.

The overall 2G/3G/LTE mobile infrastructure market came to US$12 billion in 2016, falling 9 percent year-over-year at a time when China Unicom and China Telecom were building their nationwide FD-LTE rollout.

LTE revenue declined to about US$10 billion (-4 percent year-over-year) in 2016, sustained by flat eNodeB rollouts, and leaving combined 2G and 3G revenue at less than US$2 billion.

We expect the mobile infrastructure macro hardware market in China to continue to go south, with a double-digit decline anticipated in 2017 due to the end of massive LTE rollouts. In the long run, we forecast the Chinese RAN and packet core infrastructure market to slow down further to US$2 billion in 2021, a -34 percent 2016–2021 CAGR.

Chinese Mobile Report Synopsis

Based on the IHS Markit worldwide Mobile Infrastructure Quarterly Market Tracker, the country-specific Mobile Infrastructure: China Annual Market Tracker focuses on 2G GSM, 3G CDMA2000 (TD-SCDMA, W-CDMA) and 4G LTE (E-UTRAN, EPC) mobile network equipment and subscribers in China. It provides market size, vendor market share, forecasts through 2021, analysis and trends.

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