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Chinese Telecom Operators Put Brakes on 5G Spending

By Laura Stotler

China appears to be putting the brakes on its 5G investments and rollout after two years of feverish growth. The country currently has more than three-fifths of all global 5G base stations in place at 1.5 million, with around 355 million subscribers.

In a recent briefing, Li Zhengmao, president of China Telecom, said the company expects to cut its 5G investments by roughly $5.34 billion this year. He added that he expects the company's 5G spending will remain stable and moderate over the next two years.

China Mobile also appears to be slowing down on 5G spending as well, even though the telecom giant is only partway through a 700 MHz network rollout in tandem with China Broadcast Network. China Mobile plans on spending $17.35 billion on 5G this year, a 3.5 percent decrease from previous years.

The cooldown on 5G spending could be in part due to a drop in 5G handset sales. According to reports from the China Academy of Information and Communications Technology, total domestic shipments of 5G handsets have fallen during the past two months. Last year, vendors shipped 266.1 million 5G devices, which was up 63 percent compared to 2020. But this year, February shipments were down by 24 percent compared to previous years.

Until now, much of China's 5G subscriber growth was attributed to aggressive operator marketing to upgrade 4G customers to the new network. But that initiative may have reached saturation as customers are more interested in new apps and content as a catalyst to upgrade.

A recent survey from iiMedia revealed that 62 percent of customers were satisfied with their 4G experience. Of those queried who were not using 5G, 45 percent said 5G subscription prices were too high, while 31 percent cited the expensive cost of handsets.

In place of 5G spending, it appears Chinese operators are switching up their investments and spending more on digital transformation and computing. China Mobile revealed plans to spend close to $7.6 billion on cloud, data centers and IT. And China Telecom has put aside $4.4 billion on industrial digitalization, a 54-percent increase over previous years.

Edited by Maurice Nagle

SmartCity Contributing Editor

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