How can operators tap into the 5G dividend when they have over 600 million 5G users?

Currently, the 5G era is accelerating towards us. The continued surge in the number of 5G package users shows that the 5G dividend of the communications industry has already begun. In addition to data traffic, how to find new sources of revenue in the 5G era is both an opportunity and a challenge for operators.

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The number of 5G package users hit a new high in a single month

Data shows that the three major operators all achieved a growth in user growth in October.

In terms of 5G user development: China Mobile had the largest monthly growth, with a net increase of 24.299 million households from the previous month, achieving growth of over 20 million for five consecutive months. The number of 5G package customers has reached 355.52 million, and the penetration rate of 5G package users has reached 37%.

China Telecom also achieved rapid development, with a net increase of 12.95 million 5G packages in October, and a cumulative net increase of 81.99 million 5G package users this year. The total number of 5G package users reached 168.49 million, completing the annual growth target of 80 million 5G package users two months ahead of schedule. The 5G penetration rate reached 45.4%, ranking first among operators.

China Unicom also saw a net increase of 6.568 million 5G package users in October, with a cumulative net increase of 72.683 million this year, a total of 143.513 million, and a penetration rate of 45.3%.

In terms of quantity, in October alone, the cumulative number of new 5G users of the three major operators exceeded 43.81 million. The cumulative number of new 5G users in the first ten months of 2021 alone has far exceeded the total number added last year.

In terms of mobile user growth: China Telecom still maintains its lead, with a monthly increase of 1.58 million households. In comparison, China Mobile and China Unicom increased by 1.4 million and 1.282 million households respectively.

In terms of broadband user growth: China Mobile expanded its advantage, with a monthly increase of 2.968 million households, exceeding the total of 980,000 households of China Telecom and 959,000 households of China Unicom.

Operators usher in the golden growth period of 5G

According to the development laws of the communications industry, the number of 5G users has entered a new round of rapid growth. The development of 5G users has become an accelerator for the development of operators, and the competition among operators for the 5G user market has quietly begun.

The best network is the foundation for the development of 5G users and new businesses. According to the "14th Five-Year Plan for the Development of the Information and Communication Industry" issued by the Ministry of Industry and Information Technology, the "14th Five-Year Plan" period strives to build the world's largest 5G independent networking network, and strives to have 26 5G base stations per 10,000 people. At present, there are 5 5G base stations per 10,000 people in my country. By 2025, the number of 5G base stations in China will reach more than 3.6 million. In the next four years, it is expected that 600,000 5G base stations will be added each year, and the 5G accessibility rate of administrative villages is expected to reach 80%. By then, more potential 5G users will emerge.

The development of the 5G mobile phone market has accelerated users' 5G migration. According to the October domestic mobile phone market operation analysis report released by the China Academy of Information and Communications Technology, in the first 10 months of 2021, the total shipments of the domestic mobile phone market totaled 282 million units, a year-on-year increase of 12.0%. Among them, the shipments of 5G mobile phones reached 210 million units, a year-on-year increase of 68.8%, accounting for 74.5% of the mobile phone shipments in the same period. More than 20 million 5G mobile phones are shipped each month, and the price of 5G mobile phones has dropped to around 1,000 yuan, which will further drive the rapid growth of 5G users.

Source: China Academy of Information and Communications Technology's October domestic mobile phone market analysis report

At the same time, flexible package design is also indispensable. Although the price of operators' 5G packages is higher than that of 4G, it also significantly increases data traffic. For users, the cost per GB of traffic has dropped significantly. In addition, 5G packages increase network speed and various rights such as business rights, membership rights, and service rights, which will invisibly accelerate the growth of 5G package users.

Industrial digital transformation taps into 5G dividends

According to the development trend, the 5G blue ocean market is opening up, and how to seize the dividends of 5G development has become the focus of operators' development. Yang Huisheng, director of Huawei's Operator Marketing 5G MKT, said that 5G has become a new growth engine for operators. Operators use the best 5G network as a foundation, 5G user development as an accelerator, and 5G service innovation as a growth driver to accelerate user migration and traffic growth and achieve a positive business cycle.

Currently, the three major operators are actively planning the digital transformation of the industry and innovating business areas. Industrial Internet and cloud computing have become new growth points for performance.

On the one hand, realize the integration and innovation of traditional businesses.

The SMS service will be the first to be upgraded to 5G messaging. Currently, 5G messaging is about to be commercialized. By 2025, it is estimated that there will be hundreds of millions of 5G messaging users in China alone, bringing hundreds of billions of RMB in revenue to operators.

On the other hand, service innovation is the engine of 5G business growth.

China Telecom takes 5G, Tianyi Cloud and security as its core capabilities. In the first three quarters, the industry digitalization business maintained rapid growth, with revenue reaching 74.09 billion yuan, a year-on-year increase of 16.8%. At the Tianyi Smart Ecosystem Expo Summit Forum, China Telecom Chairman Ke Ruiwen said that China Telecom has strengthened the innovative application of digital information technology around the value demands of different customer groups such as individuals, families, industries, urban and rural areas, and society, and launched a series of digital applications based on cloud-network integration. In the field of new personal information consumption, China Telecom has 350,000 cloud phone users and more than 2 million cloud computer users. At this Tianyi Smart Expo, China Telecom also launched the Digital Life Festival to accelerate the upgrading of digital information consumption.

In addition, promote research in cutting-edge technologies.

Currently, the three major operators have entered into metaverse research and developed innovative fields such as AR/VR and cloud games. With the large-scale deployment of 5G networks, the three major operators have made extensive layouts in the fields of high-definition video, VR/AR, smart home, etc., promoting the commercialization of 5G in these fields, which will also bring rich returns to the operators.

Ma Tianyi, chief analyst of communications and Metaverse at the Minsheng Research Institute, said that in the 5G era, operators' revenue has growth potential. In the short term, the marginal improvement of C-end business and the increase in 5G user penetration will drive the increase in ARPU value. In the long term, the continued increase in B-end business will bring growth space.