China's massive 4G network roll-out to help lift operators' revenue

When Beijing issued in May last year the mainland's 12th five-year plan for the telecommunications sector, one of its lofty goals was to plough investments of more than US$323 billion into basic network infrastructure by 2015.

A major part of that plan is the commercial rollout of advanced, high-speed 4G mobile infrastructure, built on the mainland-developed standard called time-division long-term evolution (TD-LTE), by all three state-owned telecommunications network operators.

Technology research firm IHS forecast China Mobile, China Unicom and China Telecom to deploy a total of 1.05 million 4G base transceiver stations from this year to 2015, a massive undertaking that will increase the operators' lucrative data traffic in the world's biggest smartphone market.

"The effort is important because mobile revenue accounts for an increasingly larger share of each carrier's overall revenue," IHS analyst Zhao Hailin said in a report. "And revenue could grow even more if more next-generation wireless infrastructure were in place."

The expansion in 4G mobile services will likely help the industry achieve another big target set by the 12th five-year plan: more than US$241.9 billion in revenue by 2015. The three operators had combined revenue of US$172.9 billion last year.

Of the mainland's 1.2 billion total mobile subscribers - nearly four times the US population - at the end of August, about 360 million were 3G users "ripe for upgrading to 4G if the infrastructure were available", Zhao said.

In a report, Barclays pointed out that smartphone penetration on the mainland remained low at between 25 per cent and 30 per cent. "We expect all three operators will continue to report robust wireless data revenue growth, benefiting from both user expansion and usage increase," it said.