“That may encourage 4G subscribers who have an ARPU (monthly average revenue per user) of over 120 yuan to migrate to 5G,” Lee said.

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Initial commercial 5G mobile services have been rolled out in South Korea, the US, Australia, the UK, Switzerland, Spain and Monaco. Yet the scale of China’s market is likely to dwarf the combined size of those economies, negating any first-mover advantage.

“For 2020, we forecast China will have 110 million 5G users, representing a 7 per cent penetration rate,” Jefferies’ Lee said. “South Korea today is roughly at 3 per cent [penetration rate].”

Three of the world’s largest telecoms network operators – China Mobile, China Telecom and Unicom – will lead the infrastructure outlay for 5G across the mainland, according to government estimates. China Broadcasting Network, which also received a licence to operate 5G commercial services in June, is expected to follow the lead of those three Hong Kong-listed carriers.

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While entry level 5G tariff plans may be cheaper per GB usage than those of 4G in China, consumers will need to subscribe to more expensive plans to get higher peak download speeds.

The basic, 128-yuan monthly 5G plan from China Mobile, for example, offers users a peak download speed of 300 megabits per second. By contrast, consumers who subscribe to the carrier’s 869-yuan 5G family package will get faster peak download speeds of up to 1 gigabit per second.

All three Chinese telecoms operators last month offered incentives to encourage more consumers to sign up early for 5G services. China Mobile, the world’s largest wireless network operator by subscribers, offered a 30 per cent discount to users who have been with its network for more than five years, and a 20 per cent discount to those who joined for less than that period.

Jefferies’ Lee, however, indicated that there were not “enough selection of affordable 5G handsets and good network performance to stimulate [faster] migration” to 5G.

Huawei, China’s biggest smartphone vendor, launched in September its Mate X foldable 5G handset with a price tag of 16,999 yuan, which showed the company’s aim to compete with the likes of Apple in the high-end segment of the market. Chinese rivals ZTE Corp, Vivo and Xiaomi Corp have also introduced their new 5G smartphones.

“If sub-2,000-yuan 5G handsets become available in large selections in the second half of 2020, 5G handset sales could exceed the number of 5G users in China,” Lee said. “Not every 5G handset buyer will necessarily want to sign up for a 5G plan if the plans stay as they are now.”