Recently the three major operators released their mobile users data in May. China Mobile again made impressive achievement, with its 4G subscribers increasing by 17.188 million, the total number of which exceeded 170 million. Its total number of mobile users also increased 373,000, reaching 816.34 million in total, which further enlarged the gap with China Telecom and China Unicom.
China Telecom, with poor performance at the beginning of TD-LTE licensing, began to "stop bleeding" with slight growth in mobile users in each month, although there’s still a larger gap with China Unicom in the users base. It’s awful for China Unicom in this year, ever since the lowest increase of 83,000 in mobile users in January, mobile users decreased 2.821 million in February, 1.609 million in March, 2.532 million in April and another 1.913 million in May, the accumulative number reached 8.79 million in the first five months of 2015.
What’s going on with China Unicom?
Looking back on 2014, we can see that the performance of China Unicom in 1H2015 was similar with that of China Telecom in 1H2014. In 2014, China Telecom accumulatively decreased 3.41 million subscribers from January to April, and noted that the main reason was “due to the competitor (China Mobile) launched 4G services and strengthened marketing, which intensified market competition."
In this year, China Unicom and China Telecom still faced strong impact of China Mobile 4G. With the policy support, China Mobile launched 740,000 4G base stations in last year and again invests CNY72.2 billion in this year, making the total number of 4G base stations exceeding 1 million. But China Unicom and China Telecom didn’t get the FDD LTE licenses until February of this year, and couldn’t catch up with China Mobile in the network construction, which became the major factor for the decline of subscribers.
The second reason is the strict implementation of the real-name system for mobile phone numbers. This system will squeeze the space for "illegal card" users, and lead to the decline of mobile users. The Chairman of China Unicom Chang Xiaobing pointed out earlier in the press conference, competition of the traditional business has become more rational, the development pattern was changing from the incremental expansion to adjustment of the existing users. As far as C114 learned, China Unicom was in the transformation to user value management, and the strategic direction was also turning to adjustment of the existing users. This move would also accelerate the loss of "illegal card" users.
The third reason was in the macro level. 2014 was a turning point for the number of mobile users in China, according to the analysis of C114 special communication expert Ma Yihua, the total mobile users in China market were 1.29 billion in 2014, with a net increase of 58 million, and the ratio of net increase to existing users fell to 4.7%, entering a saturation new normal. In this situation, it became more difficult for the weak operators (China Unicom and China Telecom) to compete for users and shows temporary imbalance.
Chances appeared in the second half of this year
Chang Xiaobing had foreseen the decline of mobile users, and pointed out on the press conference that the mobile users may appear negative growth in this year. However, just like the situation in 2H2014 in China Telecom, there’s a great chance that China Unicom will stop loosing mobile users and even increase in the number, making progress in the number of users and the performance level.
In the performance level, there’s no doubt that the impact of the replacement of business tax with value-added tax will weaken gradually and the APRU will improve by adhering to the user value management. In the user level, the first was the improvement in network competitiveness. Capital expenditure for mobile networks increased 35% in China Unicom in this year, of which a large part was in the construction of UMTS900 network.
According to information from multiple channels, the UMTS900 network construction was very strong in China Unicom in this year, the wide coverage was in the third stage of planning, which will reach even exceed the effect of China Mobile GSM network. Coupled with the China Unicom dual 4G network, it will form a strong seamless network, which will gain strong competitiveness in the network level, therefore there is a chance to appeal the existing users of China Mobile 2G or even 4G.
Secondly, with the end of inventory work of stock assets of the Tower Company, with relatively less tower resources, China Unicom and China Telecom will greatly benefit from the co-construction and sharing of the towers, especially in the rural areas, China Unicom UMTS900 can make full use of the existing tower resources. Moreover, with the issue of FDD LTE license, the 4G network construction ability of China Telecom will enhance in the second half of this year, which will form an effective balances on the China Mobile 4G network.
Just like what Chang Xiaobing and the Chairman of China Telecom Wang Xiaochu said, the domestic telecom industry market tends to saturate, and competition of the market gradually entered into the existing users era. Looking ahead to the second half of this year, along with the guiding opinions of increasing the speed and cut down the fees by the government, all the three major operators will go through a difficult year, not only to compete for the existing users, more importantly is to accelerate the network construction and business innovation, build new formats on the network and embrace a more complicated market competition environment.