China telecoms plans to share 5G network to cut costs, hurting Huawei

China Telecom is ready to set up 5G mobile network in partnership with its rivals to reduce costs, Reuters reported.
Huawei 5G base station in China

The proposal from China Telecom is likely to cut multi-billion dollar equipment orders for vendors such as Huawei Technologies, ZTE, Ericsson and Nokia.

A research report from Dell’Oro Group said healthy LTE growth and surging 5G investments in the Asia Pacific region added fuel to the global radio access networks (RAN) market in the first half of 2019. ZTE and Samsung gained share in the Asia Pacific RAN market in H1 2019.

China Mobile, China Telecom and China Unicom, the big three state telecoms — are going to roll out 5G services in more than 50 cities this year.

South Korea and the United States have already started the service that promises to support new technologies such as autonomous driving. Mobile operators in South Korea have already achieved improvement in mobile ARPU following the launch of 5G in limited areas.

Vodafone Group, the second largest telecom operator in the world, is also actively looking for 5G network share to reduce cost of its Capex and Opex.
Huawei share in telecom network market 2018
China Telecom Chairman Ke Ruiwen said on Thursday the company had reached a tentative agreement with rival China Unicom to jointly build a 5G network where they would share part of the infrastructure.

“Co-building and co-sharing would bring great savings in capital expenditure, operating expenditure, as well as improve resource utilization,” Ke Ruiwen said.

China Unicom Chairman Wang Xiaochu said last week 5G network sharing could save it between 200 billion yuan to 270 billion yuan or $28.2 billion to $38.1 billion. Both China Telecom and China Unicom kept their 2019 Capex guidance unchanged.

Unlike South Korea and the United States, China aims to build 5G network known as stand-alone network, which is more powerful than an upgrade based on the existing 4G network but is costlier.

Both Ke Ruiwen and Wang Xiaochu said they are open to working with China Mobile. Ke Ruiwen said it is possible for the three to jointly build networks in low population density areas, which would have great cost saving.

China Mobile earlier this month announced an increase of its 5G capital expenditure this year to 24 billion yuan.

Huawei, the world’s largest telecoms equipment vendor, said at the end of June it has won 50 5G contracts around the world.

China Tower, the telecom tower company jointly owned by the three mobile operators, said earlier this month that it had received client demands to install 65,000 5G base stations so far, a number that it expects to rise to 100,000 by the end of the year.