The three major operators continue to advance 5G construction, with capital expenditure concentrated in the second half of the year

Data released by the three major operators recently showed that 5G investment in the first half of the year was "cautious": China Mobile only completed 45.63% of its annual investment target; China Telecom 27.8%; China Unicom is just getting started. As the three major operators have emphasized that 5G spending will remain unchanged throughout the year, this also means that the 5G capital expenditures of the three major operators will be concentrated in the second half of the year.

Operators' 5G investment was relatively "cautious" in the first half of the year

Recently, the three major operators have successively released their performance reports for the first half of 2021. Faced with the complex internal and external environmental challenges in the first half of the year, the three operators have achieved growth in revenue and profit, and the growth rate is relatively large. However, judging from the first half of the year expenditures announced by the three major operators, 5G investment in the first half of the year was relatively "prudent".

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Data shows that China Mobile's 5G-related investment totaled 50.2 billion yuan in the first half of 2021. As of the end of June, a total of 501,000 5G base stations had been put into operation, providing 5G services to urban areas above prefecture-level cities, some county towns and key areas across the country.

Data released by China Telecom showed that China Telecom's capital expenditure was 27 billion in the first half of 2021. Among them, 11.05 billion yuan was invested in 5G networks, and 50,000 5G base stations were built.

China Unicom has added about 80,000 new available 5G base stations in the first half of the year, reaching more than 460,000 stations. However, the specific data of 5G expenditure in the first half of the year has not been disclosed. According to the data of the semi-annual report, in the first half of the year, China Unicom's capital expenditure totaled 14.28 billion, mainly used in mobile network, broadband and data, infrastructure and transmission network construction. Among them, the mobile network spent 4.55 billion yuan in the first half of the year, accounting for 31.83%. China Unicom's 5G expenditure can be "glimpsed" from this.

At the beginning of this year, the Ministry of Industry and Information Technology emphasized that it is necessary to complete the deep coverage of 5G in cities at the prefecture level and above as soon as possible in accordance with the principle of moderate advancement, and gradually accelerate the extension to counties and towns with conditions. In 2021, it is planned to build 600,000 new 5G base stations, and at the same time guide local governments to increase support for 5G network construction and further implement relevant policies such as 5G site locations and electricity consumption.

In response, the three major operators have also issued 5G "military orders". China Mobile announced that its 5G-related capital expenditure in 2021 will be 110 billion yuan; China Telecom's 5G network investment remains at 39.7 billion yuan; China Unicom's 5G capital expenditure plan for 2021 is about 35 billion yuan.

However, according to the data released in the first half of the year, China Mobile has completed 45.63% of its 5G investment, which is close to "half"; China Telecom's 5G expenditure in the first half of the year was 27.8%, less than one-third of the target. China Unicom seems to be "on track".

Operators' 5G investment will be the "main focus" in the second half of the year

Overall, operators were relatively cautious in their 5G investment and construction in the first half of the year. However, the three major operators also emphasized that they would maintain their full-year 5G investment plans, which also means that the pace of operators' 5G investment and construction will accelerate in the second half of the year.

There are reasons for the "slowdown" in 5G investment in the first half of the year, and the three major operators also gave explanations for this.

China Mobile revealed that the reason for the delay in investment compared to last year was that it was still negotiating with China Broadcasting Corporation on the co-construction of the 700MHz frequency band. The company's 5G 700M wireless network main equipment bidding was completed in July. China Telecom and China Unicom said that they were mainly interested in controlling the pace of investment, improving equipment utilization efficiency, and waiting for 5G technology and standards to mature. At the same time, co-construction and sharing can also save considerable costs for both parties.

In fact, the three major operators have been steadily promoting 5G construction in light of their own characteristics. In the second half of the year, China Mobile and China Broadcasting Corporation launched and completed the centralized procurement of 5G 700M base stations, with a procurement scale of approximately 480,397 stations; China Telecom and China Unicom also launched and completed the centralized procurement of 5G wireless main equipment (2.1G), with a procurement scale of 242,000 base stations.

The IDC report pointed out that in 2021, the four operators bid for a total of 722,000 wireless main equipment stations (of which China Mobile and China Broadcasting Corporation's 480,000 700M 5G base stations were completed in two years), with an investment of more than 58 billion yuan. Compared with last year's 5G Phase II bidding (the three operators bid for a total of 480,000 stations with an investment of 70 billion yuan), the obvious change is "increase in quantity and decrease in price".

China Mobile has a total of 501,000 5G base stations in the first half of the year, and plans to open more than 700,000 5G base stations by the end of this year; China Telecom built 50,000 5G base stations in the first half of the year, with an annual target of 180,000 self-built 5G base stations, striving to reach 700,000 5G base stations in use; China Unicom added about 80,000 available 5G base stations in the first half of the year, reaching more than 460,000 stations, striving to achieve a target of about 700,000 available 5G base stations by the end of the year, and a target of about 320,000 new available 5G base stations.

Therefore, the pace of 5G construction investment by the three major operators will inevitably accelerate in the second half of the year. For equipment vendors and the mobile communication system equipment industry chain, the second half of the year will inevitably be a critical period where "opportunities and challenges" coexist. The opportunities are new revenue and shipments, and the challenges are construction and delivery capabilities in the short term.

As predicted by IDC, China's 5G CAPEX market will maintain a steady growth trend. Looking at the current situation of China's 5G, although 5G construction has grown rapidly in 2020, IDC believes that China's 5G construction will not be achieved overnight, and China's 5G development will continue to ferment as 5G industry applications continue to deepen. The pace of 5G construction by Chinese operators will also advance steadily, and the annual investment plan and investment direction will be adjusted year by year in line with market demand. Through the continuous exploration and innovation of Chinese enterprises, operators and equipment manufacturers, China will continue to lead the global market development in 5G construction and application.