3 major operators continue to advance the pace of 5G construction & capital expenditures are concentrated in the second half of the year

According to data disclosed by the three major operators a few days ago, 5G investment in the first half of the year was "prudent": China Mobile only completed 45.63% of the annual investment target; China Telecom 27.8%; China Unicom was "on the road". As the three major operators have emphasized to maintain 5G expenditures unchanged throughout the year, this also means that the 5G capital expenditures of the three major operators will be concentrated in the second half of the year.

The data disclosed by the three major operators a few days ago showed that 5G investment in the first half of the year was "prudent": China Mobile only completed 45.63% of the annual investment target; China Telecom 27.8%; China Unicom was "on the road". As the three major operators have emphasized to maintain 5G expenditures unchanged throughout the year, this also means that the 5G capital expenditures of the three major operators will be concentrated in the second half of the year.

Operators' 5G investment in the first half of the year was "prudent"

Recently, the three major operators have successively released performance reports for the first half of 2021. Facing the complicated internal and external environmental challenges in the first half of the year, the revenue and profits of the three operators have all achieved growth, and the increase has been relatively large. However, judging from the expenditures announced by the three major operators in the first half of the year, 5G investment in the first half of the year was relatively "prudential."

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Data show that in the first half of 2021, China Mobile's 5G-related investment totaled 50.2 billion yuan. As of the end of June, a total of 501,000 5G base stations have been opened to provide 5G services to urban areas above prefectures and cities, some counties and key areas across the country.

According to data released by China Telecom, China Telecom's capital expenditure in the first half of 2021 was 27 billion. Among them, 5G network investment 11.05 billion yuan, self-built 50,000 5G base stations.

In the first half of the year, China Unicom has achieved approximately 80,000 new available 5G base stations, reaching over 460,000. However, the specific data of 5G spending in the first half of the year was not disclosed. The data in the semi-annual report shows that in the first half of the year, China Unicom’s capital expenditures totaled 14.28 billion, mainly for mobile networks, broadband and data, infrastructure and transmission network construction. Among them, the mobile network spent 4.55 billion yuan in the first half of the year, accounting for 31.83%. From this, China Unicom's 5G spending can be "a glimpse."

At the beginning of this year, the Ministry of Industry and Information Technology emphasized at all levels that it is necessary to complete the in-depth coverage of 5G prefecture-level and above cities as soon as possible in accordance with the principle of moderate advancement, and gradually accelerate the expansion to qualified counties and towns. In 2021, it is planned to build 600,000 5G base stations, and at the same time guide local governments to increase support for 5G network construction, and further implement 5G site, electricity and other related policies.

In this regard, the three major operators have also laid down 5G "military orders." China Mobile announced 110 billion yuan in 5G-related capital expenditure in 2021; China Telecom's 5G network investment remained at 39.7 billion yuan; China Unicom's 2021 5G capital expenditure plan is about 35 billion yuan.

But from the data released in the first half of the year, China Mobile's 5G investment has completed 45.63%, close to "half"; China Telecom's 5G expenditure in the first half of the year completed 27.8%, which is less than one-third of the target. China Unicom is a bit "on the road".

 

Operators' 5G investment in the second half of the year is the "big focus"

On the whole, operators' investment and construction of 5G in the first half of the year are relatively "prudential." But the three major operators have also emphasized that they will maintain the annual 5G investment plan unchanged, which also means that the pace of 5G investment and construction by operators will accelerate in the second half of the year.

There are also incentives for the “slowdown” of 5G investment in the first half of the year, and the three major operators have also given explanations.

China Mobile revealed that because the issue of co-building the 700MHz frequency band with China Radio and Television is still being negotiated, the investment has been slightly delayed compared to last year. At present, the company's bid for the main equipment of the 5G 700M wireless network has been completed in July. China Telecom and China Unicom said that they mainly intend to control the pace of investment, improve equipment utilization efficiency, and wait for 5G technology and standards to become more mature. At the same time, joint construction and sharing will also save both parties considerable costs.

In fact, the three major operators have been steadily advancing 5G construction based on their own characteristics. In the second half of the year, China Mobile and Radio and Television started and completed the centralized procurement of 5G 700M base stations, with a procurement scale of approximately 480,397 stations; China Telecom and China Unicom also initiated and completed the centralized procurement of 5G wireless master equipment (2.1G), with the procurement scale reaching 242,000 base stations.

The IDC report pointed out that in 2021, the four operators will bid for a total of 722,000 wireless master equipment stations (including China Mobile and China Radio and Television’s 480,000 700M 5G base stations completed in two years), with an investment of more than 58 billion yuan. Compared with the second phase of the 5G tender last year (the three companies have tendered 480,000 stations with an investment of 70 billion yuan), the obvious change is "the increase in volume and the decrease in price."

China Mobile has accumulated a total of 501,000 5G base stations in the first half of the year, and plans to open more than 700,000 5G base stations by the end of this year; China Telecom will build 50,000 5G base stations in the first half of the year, and aim to build 180,000 5G base stations for the whole year. There are 700,000 5G base stations in use; China Unicom added about 80,000 5G base stations in the first half of the year, reaching over 460,000, and strives to achieve the goal of approximately 700,000 5G base stations by the end of the year, and approximately 320,000 new 5G base stations are newly available The goal.

Therefore, the pace of investment in 5G construction by the three major operators will inevitably accelerate in the second half of the year. For equipment vendors and the mobile communication system equipment industry chain, the second half of the year will inevitably be a critical period for the coexistence of "opportunities and challenges". Opportunities are new revenue and output. The challenge is to build and deliver capacity in the short term.

As predicted by IDC, China's 5G CAPEX market will maintain a steady growth trend. Looking at the status quo of 5G in China, despite the rapid growth of 5G construction in 2020, combined with the comprehensive considerations of technology, policy, commercialization, and industry standards, IDC believes that China's 5G construction will not be accomplished overnight, and China's 5G development will follow 5G. Industry applications continue to deepen and continue to ferment, and the pace of 5G construction by Chinese operators will steadily advance. Each year's investment plans and investment directions will be adjusted year by year in accordance with market needs. Through the continuous exploration and innovation of Chinese enterprises, operators and equipment vendors, China will continue to lead the development of the global market in terms of 5G construction and applications.