Unicom's 4G update expected soon
China Unicom (Hong Kong) could shed more light on its 4G mobile infrastructure expansion plans when it reports its financial results for the third quarter on Thursday, easing concerns about its capital spending next year.
The Beijing-based firm, which operates the mainland's second-largest wireless network, earlier announced the construction during the second half of the year of trial mobile networks based on the world's two recognised 4G standards. One is based on the mainland-developed standard, known as time-division long-term evolution (TD-LTE), and the other on the more mature and widely deployed frequency-division duplex long-term evolution (FDD-LTE).
In a report, Barclays said that while Unicom would regard supporting the indigenous TD-LTE development as important, it was also "very committed to FDD-LTE, being its eventual transition path to 4G", and hoped that an FDD-LTE licence would come soon.
Unicom chairman and chief executive Chang Xiaobing said in August that it was too early to tell the number and location of cities in which the operator's pilot 4G programme would be rolled out.
"We are looking at a number of capital cities and popular places for the TD-LTE trial network but it's too early to be specific or to tell how much the investment will be," he said.
The central government is widely expected to grant 4G TD-LTE licences to the three state-run telecommunications network operators in the fourth quarter of the year.
Chang has said the company's long-term strategy will be the evolution of its 3G network, which is based on the standard called wideband code division multiple access, to FDD-LTE. He also reaffirmed Unicom's 80 billion yuan (HK$101.14 billion) guidance for total capital expenditure this year.
But Heyman Chiu, a senior research analyst at Cinda International, suggested Unicom might have to adjust its 4G expenditure next year, for which it announced spending of up to 10 billion yuan.
Barclays said it expected Unicom's capital expenditure next year would remain at the same level of 80 billion yuan as this year. "We think exceeding [capital expenditure] is a valid concern, but this is a lower probability event," it said, adding that 4G - for Unicom as well as rivals China Mobile and China Telecom - "is not going to be a mass-market solution for at least the next 12 to 18 months in China".
China Mobile, the world's largest wireless network operator, is making the biggest push for 4G this year with a programme to deploy 207,000 4G base stations in both urban and rural areas. The company, which had 750.4 million mobile subscribers at the end of August, completed its 4G network trials last year.
Unicom posted a 55 per cent year-on-year increase in net profit to 5.3 billion yuan in the first half, driven by solid 3G subscriber growth. Revenue rose 18.6 per cent to 144.3 billion yuan.
Barclays forecast 3G revenue would account for 59 per cent of Unicom's mobile service revenue this year, rising to 67 per cent in 2014.
Unicom had 272.76 million mobile subscribers at the end of last month, of whom 111.63 million were 3G users.
Its share price slipped 0.47 per cent last Friday to close at HK$12.68.