Net loss of fixed-line broadband users: China Unicom sounds red alert

December 22 news (Yue Ming) Recently, the three major telecom operators have successively released their operating data for November 2016.

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Basically consistent with the trend of the previous ten months, China Mobile has achieved brilliant results on both the mobile 4G and fixed-line broadband fronts. China Telecom has performed fairly well in the two-pronged operation, while China Unicom has been somewhat distracted and has actually seen a net loss of fixed-line users.

Monthly exam transcript

China Mobile added 12.5 million 4G users in November, and the total number of 4G users exceeded 500 million for the first time, reaching 509.8 million. The number of new users in November was 1.423 million, and the cumulative net increase this year was 21.006 million, with a total of 847.247 million users. In terms of fixed networks, China Mobile added 1.674 million broadband users in November, and the cumulative net increase this year was 22.155 million, with a total of 77.184 million broadband users.

China Telecom added 4.33 million 4G users in November, with a total of 117.3 million 4G users. The number of new users in November was 260,000, with a cumulative net increase of 16.27 million this year, and a total of 214.17 million users. In terms of fixed-line, China Telecom added 660,000 broadband users in November, with a cumulative net increase of 9.17 million broadband users this year, and a total of 122.23 million broadband users.

China Unicom added 5.038 million 4G users in November, with a total of 99.033 million 4G users. The number of new users in November was 409,000, with a cumulative net increase of 10.673 million this year, and a total of 262.99 million users. In terms of fixed-line, China Unicom's broadband users decreased by 70,000 in November, with a cumulative net increase of 3.072 million broadband users this year, and a total of 75.402 million broadband users.

Sounding the red alert

Influenced by multiple dividends such as policies, markets and technologies, the three major operators have maintained a growth rate in fixed-line networks, and the absolute number of users rarely decreases in a single month because the market is not fully saturated.

In the opinion of industry insiders, the decline in China Unicom's user base is due to a variety of factors.

First, after Wang Xiaochu officially took charge of China Unicom, he began to implement a focus strategy, investing limited resources in the construction and marketing of 4G networks, which would produce faster results. The investment in fixed-line broadband was not prominent, and fixed-line business was highly dependent on infrastructure investment.

Secondly, China Unicom faces fierce market competition from China Mobile and some private enterprises. Although it can provide high-quality network services, it still faces great pressure in the market with horizontal price wars, and it is more difficult to maintain price-sensitive users.

Third, although China Unicom is also working hard to develop fixed-mobile convergence services such as "Smart Wojia", the unreasonable internal assessment mechanism has also suppressed the enthusiasm of some employees. Overall, China Unicom has not found an effective way to deal with China Mobile's "gold and money" offensive. After being overtaken by China Mobile last month, the gap in user scale between it and China Mobile has begun to widen.

It should be pointed out that although the fixed-line broadband business is not as good as the mobile network in terms of ROI, the fixed-line business is an important carrier for entering and maintaining the household market, and can also generate a steady stream of cash flow. If China Unicom does not adjust in time, it will face greater pressure in the subsequent market competition. Under the current industrial structure, deepening cooperation with private capital may be a way out.