Digital services become the growth line
Since the three carriers were licensed for 5G in 2019, they have carried heavy capital expenditure. By the end of February China had 1.506 million 5G base stations, according to the Ministry of Industry and Information Technology, and that build-out is the carriers’ money.
In 2021 China Mobile spent about 183.6 billion RMB in total capital expenditure, roughly 60% of it on 5G; China Telecom spent 86.7 billion RMB, 44% on 5G; China Unicom spent 69 billion RMB, 46% on 5G.
Take China Mobile as the leader. Its 5G-related capital spending was 102.5 billion RMB in 2020, 114 billion in 2021, and is expected to be about 110 billion in 2022. The company says it will have 1.1 million 5G base stations open by the end of 2022, 480,000 of them on the 700 MHz band. Its chairman’s assessment was that 5G investment would be slightly lower this year, would stop growing from next year, and would then decline gradually — 2020 through 2022 was the peak. The same shape applies at China Telecom and China Unicom.
Against that backdrop, the 2021 profit growth was hard-won. All three carriers grew revenue, and net profit attributable to shareholders came in at 115.94 billion, 6.31 billion and 25.95 billion RMB for China Mobile, China Unicom and China Telecom respectively — up 7.5%, 14.2% and 24.4%.
Digital services are where the growth is. China Mobile’s digital transformation business reached 159.4 billion RMB, up 26.3%, or 21.2% of core business revenue, contributing 59.5% of the increase in communications service revenue. China Telecom’s industrial digitalisation revenue reached 98.9 billion RMB, up 19.4%, with Tianyi Cloud doubling to 27.9 billion RMB and IDC revenue at 31.6 billion. China Unicom’s industrial internet revenue grew 28.2% to 54.8 billion RMB, 18.5% of core revenue.
Where the investment has landed
After two years of heavy spending, the return is beginning to show: 5G subscribers are growing and industry applications are being deployed. By the end of February there were 384 million 5G mobile subscribers, and all three carriers grew their base while improving value per user. Mobile ARPU for 2021 was 48.8, 43.9 and 45 RMB for China Mobile, China Unicom and China Telecom, up 3.0%, 4.3% and 2.0%.
On industry applications, the part everyone watches, China Mobile reports 200 flagship 5G projects, more than 2,800 higher-value contracts, 1,590 private 5G network projects and more than 16 billion RMB in DICT contracts, with scale deployments in smart mining, smart factories, smart power, metallurgy, ports and hospitals. China Telecom’s custom 5G network projects cover all 15 key industries in the national 5G application programme, with more than 1,200 projects delivered in the year. China Unicom, as the official communications partner for the Beijing 2022 Winter Olympics and Paralympics, built the connectivity layer for what it calls a smart, technological and secure Games, including the first full 5G+4K/8K broadcast of an Olympic event and 5G plus cloud plus XR viewing in the venues.
Computing networks next
In February the national east-data-west-computing programme was formally launched, and the carriers are its main builders. All three are now laying out computing networks.
China Mobile put the number at 48 billion RMB of computing network investment this year, covering mobile cloud, the business network, data centres, aggregation facilities, transmission and edge computing — everything that touches compute — and said the figure is likely to rise. The company describes a converged network offering one access point and compute on demand, with scheduling across physical, logical and heterogeneous space, working toward compute as a utility like water or electricity. On the supply side it reports 407,000 externally available IDC racks, a net increase of 47,000. During the Winter Olympics it combined the computing network with metaverse concepts for digital sports personalities, XR studios and an AR ice town.
China Telecom plans about 14 billion RMB of computing investment in 2022, adding 160,000 cloud servers and lifting compute capacity by more than 8%, plus 6.5 billion RMB in IDC investment for 45,000 new racks. China Unicom is building a 5+4+31+X data centre system: four national eastern hubs in the Beijing-Tianjin-Hebei, Yangtze Delta, Greater Bay Area and Chengdu-Chongqing regions; four western hubs in Inner Mongolia, Guizhou, Gansu and Ningxia; provincial facilities built as demand requires; and edge centres deployed flexibly.
Republished for information. The original text has not been independently verified and does not necessarily reflect our views.
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