Mobile user development of the three major operators has reached a ceiling, and 5G messaging is steadily advancing, but challenges remain

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Recently, the three major operators have successively announced the financial and operating data for the first three quarters of this year. The data shows that from January to September, the revenue of the three major operators has achieved year-on-year positive growth. In terms of net profit, except for China Mobile, which fell slightly by 0.3%, China Telecom and China Unicom both increased year-on-year.

5G has been commercially available for more than a year. As of the end of September, my country has basically achieved 5G coverage in cities and the number of 5G terminal connections has exceeded 160 million. At the same time, the number of 5G users is also growing steadily, and 5G messaging has made new progress. The imagination brought by 5G, a key investment area, is also gradually growing.

Operators' performance rebounded, and emerging businesses contributed more to revenue

According to statistics from reporters, in the first three quarters of 2020, the three major operators had a total net profit of 105.09 billion yuan, with an average daily profit of about 384 million yuan, lower than 403 million yuan in the same period of 2019.

Specifically, the revenue of the three major operators in the first three quarters increased, indicating that they are gradually recovering from the impact of the epidemic. Among them, China Mobile ranked first with 574.4 billion yuan, followed by China Telecom with 292.6 billion yuan in revenue, and China Unicom ranked last with 225.4 billion yuan in revenue.

In terms of net profit, China Mobile's net profit for the current period was 81.6 billion yuan, while China Telecom and China Unicom's were 18.7 billion yuan and 4.8 billion yuan respectively, with a large difference. However, except for China Mobile, China Unicom and China Telecom's profits both grew positively, with China Unicom's net profit growing by 10.8% year-on-year. China Mobile stated in its financial report that its profits continued to improve in the third quarter and achieved positive growth.

Overall, the revenue structure of the three major operators continues to optimize, the impact of IDC, CDN, industrial Internet and other fields on revenue has gradually increased, and the revenue share of these emerging businesses has also gradually increased.

China Unicom's financial report shows that in the first three quarters of 2020, the revenue of industrial Internet business was 32.656 billion yuan, up 34.4% from the same period last year. And thanks to the rapid growth of innovative business, its fixed-line main business revenue reached 89.057 billion yuan, up 12.9% from the same period last year.

China Telecom also stated in its financial report that the industry digitalization revenue in the first three quarters of this year was about 63.436 billion yuan, a year-on-year increase of 6.9%. Among them, IDC revenue reached 21.584 billion yuan. At the same time, it accelerated the promotion of the cloud-network integration strategy of "network as the foundation, cloud as the core, network following the cloud, and cloud-network integration". The total network cloud business revenue was about 8.046 billion yuan, maintaining rapid growth and further increasing in scale.

Although China Mobile did not specify the revenue of its emerging businesses in its financial report, it said it would continue to promote the "5G+" plan, deepen scale-based value management, and promote CHBN (C: mobile market, H: home market, B: government and enterprise market, N: emerging market) in all directions to achieve continued growth in communication service revenue throughout the year.

The latest data released by the Ministry of Industry and Information Technology shows that from January to September, the total revenue of telecommunications business reached 1,022.8 billion yuan, a year-on-year increase of 3.2%, and the growth rate was the same as that in the first half of the year. Among them, the fixed communication business revenue reached 349.4 billion yuan, a year-on-year increase of 11.5%, an increase of 2.1 percentage points over the same period last year; the mobile communication business revenue reached 673.4 billion yuan, a year-on-year decrease of 0.6%, and the decline narrowed by 3.3 and 0.3 percentage points respectively compared with the same period last year and the first half of this year.

In addition, fixed value-added and other income continued to grow rapidly, strongly promoting the growth of telecommunications business revenue. The three basic telecommunications companies actively developed emerging businesses such as IPTV, Internet data centers, big data, cloud computing, and artificial intelligence. In the first three quarters, they completed fixed value-added business revenue of 130.8 billion yuan, a year-on-year increase of 23.1%, accounting for 12.8% of telecommunications business revenue, driving the growth of telecommunications business revenue by 2.5 percentage points.

Mobile user growth has reached a ceiling, and new players are coming

As 5G has been commercially available for more than a year, the effectiveness of operators' 5G construction has begun to emerge. The latest data shows that as of the end of September, my country has built a total of 690,000 5G base stations, and the cumulative number of terminal connections has exceeded 160 million.

Recently, Wen Ku, spokesman of the Ministry of Industry and Information Technology and director of the Information and Communications Development Department, said that the construction of 5G base stations has now completed the annual target of 500,000 ahead of schedule, and 5G coverage has basically been achieved in prefecture-level cities.

So far, China Mobile has opened more than 350,000 5G base stations, and has achieved commercial use of 5G networks in all prefecture-level cities and some key county towns across the country, completing the annual 5G construction target ahead of schedule. China Telecom and China Unicom jointly built and shared 5G networks, with a total of 330,000 5G base stations opened, and 5G network coverage expanded to all prefecture-level cities and above across the country.

Judging from the data disclosed in the financial report, China Mobile's leading position in the number of 5G package users has further expanded. The financial report shows that as of September, China Mobile's 5G package users reached 114 million, and China Telecom's total 5G package users reached 64.8 million. The total number of 5G package users of China Mobile and China Telecom reached 178 million, while China Unicom has not yet announced the number of 5G package users.

The operating data released by the three major operators showed that 4G users and 5G package users have achieved positive growth. However, except for China Telecom, the number of new mobile users of China Unicom and China Mobile still showed negative growth in the first nine months of this year.

Independent telecom analyst Fu Liang said that around 1.6 billion will be the peak number of mobile phone users in my country, and it will be difficult to make a major breakthrough unless the environment changes significantly.

It can be seen that with the disappearance of the demographic dividend, the mobile user development of operators will reach the ceiling. In this case, due to the continuous advancement of number portability and the entry of the fourth largest operator China Broadcasting and Television, the competitive pressure for the development of 5G users still exists.

Recently, China Broadcasting Network Co., Ltd. held a ceremony to unveil its name, becoming the fourth largest operator in China. By signing a contract with China Mobile to realize the co-construction and sharing of base stations, in the future, China Broadcasting Network's mobile phone users will be able to use China Mobile's base stations in addition to using China Broadcasting Network's self-built 5G base stations. It is revealed that in addition to 5G services, China Broadcasting Network is expected to launch 4G services in the future.

In August this year, Yang Jie, chairman of China Mobile, said that China Mobile's parent company has signed a cooperation agreement with China Broadcasting Corporation, and the two sides are currently conducting further discussions on the details. There is no specific and substantial network construction deployment in the entire 5G cooperation this year. It is expected that the two sides will jointly build and share 5G next year.

However, Fu Liang believes that a certain balance has basically been achieved among the three major operators, and the trend of mutual promotion between wired broadband and mobile users remains. How the newly entered China Radio and Television will break through will become a difficult problem.

5G messaging is advancing steadily, but challenges remain

In April this year, the three major operators announced that they would jointly launch "5G messages" to transform and upgrade traditional short messages in a terminal-native way. In addition, the Global System for Mobile Communications Association GSMA plans to include 5G messages as a mandatory function of 5G terminals. Users can use 5G message services conveniently when they replace 5G mobile phones or upgrade existing 4G/5G mobile phones without downloading the client.

In a short period of time, 5G messaging has attracted much attention and has become a highly anticipated 5G application.

Later in July, Zhuang Renfeng, deputy general manager of China Mobile Internet Company, said that at present, the three operators have started the construction of 5G message commercialization platforms, and the development of 5G messages in China has entered the fast lane.

It has been half a year since the launch of 5G messaging. At present, 5G messaging still has a long way to go before it can be truly implemented.

Recently, Wu Huazhi, deputy general manager of the Converged Communications Division of China Mobile Internet Co., Ltd., said that China Mobile's 5G messaging is now open for trial commercial use to friendly users in 15 pilot provinces.

Hu Bo, director of the Terminal Business Research Office of China Unicom Research Institute, said that China Unicom has launched commercial experiments in the early stage and explored the opening of capabilities based on 5G messages.

Du Chengxin, general manager of the 5G message operation department of China Telecom's Value-Added Center, introduced that China Telecom currently has a team of about 70 to 80 people engaged in 5G message research and development and operations, which has invested several million yuan. The company is also working with partners to continuously promote the development and testing of 5G message services.

According to GSMA's prediction of the market space for A2P SMS and RCS, the current global market for A2P SMS is US$60 billion, which is expected to grow to US$90 billion by 2021, while the market space for RCS may be greater than US$150 billion.

Industry insiders believe that 5G messaging may become the first 5G application to be implemented and popularized in China, which will create new market opportunities. However, the future 100 billion market of 5G messaging cannot be separated from the cooperation of upstream and downstream of the industry chain, and still needs to be promoted through the coordination of the three operators and a large number of partners.