China Mobile sees deal on telecoms towers completed this year

China Mobile plans joint venture on network towers with two other top firms, citing need to cut spending before expansion of 4G services

PUBLISHED : Friday, 23 May, 2014, 12:51am
UPDATED : Friday, 23 May, 2014, 12:51am

The proposed venture between the three firms that are mainly responsible for operating and maintaining China's telecommunications towers will be established this year, China Mobile said.

"The government and the three of us are pushing it forward actively," said chairman Xi Guohua. "It may be established in the third quarter if things go smoothly."

He said the sharing of resources with China Telecom and China Unicom would reduce the company's capital expenditure. The world's largest wireless network operator by number of subscribers has budgeted 225.2 billion yuan (HK$279.6 billion) in spending this year, a third of which will be spent on 4G network-services expansion.

The company said its role would be that of a "shareholder" in the venture although it had "absolute superiority" in terms of the number of towers.

Barclays Research estimated there are as many as 465 telecommunications towers across China. The three carriers are expected to lease towers from the venture instead of building new ones.

There would be no price war, Xi said. "The three firms have reached a consensus that a price war is not healthy for the market."

He added that heavy spending this year was necessary for future development.

"Without the investment into 4G networks, we may be able to maintain growth for another two years," Xi said. "But after that, the company would have no future."

The company is also investing heavily in promoting smartphones and luring users to move from the 2G network to 3G and 4G service providers.

Total users reached 784.6 million last month, but some 70 per cent are still on 2G services.

Last week, the company said it was lowering the price of its 4G service by about 40 per cent, the first response after the government launched a policy of granting operators pricing autonomy.

The new entry-level monthly data package will be 30 yuan for 500 megabytes, compared with 40 yuan for 400 megabytes under the current plan.

The company said real growth in 4G business would start in the second half of the year.