Chinese LTE mobile infrastructure market in decline, argues IHS Markit

A network sharing deal between China Unicom and China Telecom in 2016 has been a contributing factor in the country’s LTE capex decline by 16% year on year, according to the latest note from IHS Markit.

Insights from IHS Markit’s “2017 Mobile Infrastructure: China Annual Market Tracker” show that China – being the world’s largest mobile subscriber base – had a total of 1.3 billion subscribers in 2016. Among these subscribers, 64% were on China Mobile’s GSM/TD-SCDMA/LTE network, while 58% of China’s mobile subscribers are now on LTE; this is up from 32% in 2015.

Despite the decline in LTE capex due to the China Unicom and China Telecom deal, the combination of both companies’ addition of FD-LTE (frequency division LTE) eNodeBs and China Mobile’s moderate TD-LTE (time division LTE) rollouts led to a combined total of 1,020,000 eNodeBs deployed, which is the same number as in 2015, IHS added.

In 2016, the overall 2G/3G/LTE mobile infrastructure market witnessed a 9% downfall on a year-on-year basis to USD 12 billion. This happened at the time when China Unicom and China Telecom were building their nationwide FD-LTE rollout. In the same year, the LTE revenue fell about USD 10 billion, in other words -4% year-on-year, sustained by flat eNodeB rollouts, and leaving combined 2G and 3G revenue at less than USD 2 billion.

IHS Markit is now expecting a decline in the country’s mobile infrastructure macro hardware market, with a double-digit drop anticipated in 2017 due to the end of massive LTE rollouts. Moreover, the Chinese RAN and packet core infrastructure market is also forecast to decelerate further to USD 2 billion in 2021, a -34% 2016–2021 CAGR. 

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