Huawei and China Mobile stick a 5G base station on Mount Everest

Chinese telecoms giants Huawei and China Mobile have chosen the highest mountain in the world to make some kind of point about how great they are at 5G.

They put a base station 6,500 meters up Mount Everest, from which they reckon people will be able to access 5G from the summit. We’ve all been there, haven’t we? You get to the top of the world and fancy streaming the footie while you’re up there. Until now bored climbers were forced to talk to each other at the summit, but no longer.

There’s a distinctly nationalistic flavour to the stunt too. “It comes on the 60th anniversary of the first successful ascent of Mount Everest from the northern slope and the 45th anniversary of China’s first official accurate measurement of Mount Everest,” declared the press release. “Significantly, the 5G network on Mount Everest will provide communication services for the 2020 Mount Everest re-measurement.”

Maybe that measurement 45 years ago wasn’t so accurate after all then. The border of China and Nepal goes through the peak of Mount Everest, with China claiming the northern half, which is presumably where this base station has been placed. The announcement performs the usual chest-beating about the technological and commercial prowess this demonstrates on the part of the two companies involved, but we’ll spare you the gory details.

“Huawei strongly believes that technology means to make the world better,” concluded the press release. “The beauty of Mount Everest can be displayed via 5G high-definition video and VR experience, which also provides further insights for mountaineers, scientists and other specialists into the nature. The ground-breaking establishment on Mount Everest once again proves that 5G technology connect mankind and the Earth harmoniously.”

Whether the growing legions of 5G conspiracy theorists will agree is distinctly uncertain. After all, what better way to control the minds of the world than to beam malevolent radiation from the top of it? Having said that, if any of them manage to vandalize this 5G base station they at least deserve top marks for effort. Here’s a diagram to explain why they may be mistaken.

ZTE wins a chunk of China Mobile’s 5G core work

Chinese kit vendor ZTE has won the bid for a bunch of work on the standalone 5G core of China Mobile.

Any deal win with China Mobile is significant as it’s the world’s largest mobile operator. It is generally expected that the majority of any such work will be given to Chinese vendors, as that’s the way things seems to be done over there. Most recently China Mobile awarded 86% of its 5G RAN work to Chinese vendors, with ZTE getting around 30% of the work.

It’s hard to work out precisely how big a piece of the 5G core pie ZTE has got, because the English language press release seems to have just been put through Google Translate, but it looks like ZTE did a bit bet in the core than it did the RAN.

“For the public-oriented network, ZTE has won the bid of 12 provinces in six regions, and secured the bid for 35% shares in 31 provinces in China for the industry-oriented network,” said the press release. “This well demonstrates the company’s industry-leading strength in the 5G SA core network.”

We also got a rare update on ZTE’s global 5G deal wins. “To date, ZTE has obtained 46 commercial 5G contracts in major markets, such as Europe, Asia Pacific, Middle East and Africa (MEA),” we’re told. “ZTE commits 10 percent of its annual revenues to research and development and takes leadership roles in international standard development organizations.”

That number still puts ZTE well behind Huawei, Ericsson and Nokia. But is still a decent tally. Huawei doesn’t seem to have made any announcements regarding its share of Shina Mobile’s 5G core work, but it seems safe to assume it got most of the remainder.

Nokia China boss apologies for missing out on mega contracts

Nokia China CEO Markus Borchert has written an open letter to apologise for missing out on a significant chunk of 5G business, as well as a mysterious letter which appeared in the press.

Last month it was announced China Mobile, the worlds’ largest telco, would award the vast majority of its 5G contracts to Chinese firms, with Ericsson collecting a small slither. Nokia was left out of the equation, a bitter pill to swallow considering the cash which would be spent by China Mobile over the coming months and years.

In the letter which was published in People’s Post & Telecommunications News, Borchert stated it would remain a committed partner to China Mobile, and perhaps there was a bit of damage limitation also.

“We hereby solemnly declare that the letter ‘Nokia Bell from Shanghai to China Unicom on March 31’ circulating online recently does not represent our position and attitude,” Borchert also stated.

The letter Borchert is referring to painted a relatively gloomy picture for competition in China. With a Nokia Shanghai Bell letter head, it was supposedly written by an employee who described ‘drastic price cuts’ as a reason Nokia missed out on the China Mobile contracts. The letter also questioned the ‘historical performance’ of various vendors.

While Borchert has said the letter does not represent the opinions and position of Nokia China, it comes at a time where the wider business is under severe pressure in the 5G world. Nokia missing out on a major contract might not raise than many eyebrows, but the coming weeks will give more insight into how much of a future the Finnish company has in China.

Over the course of 2019, Nokia China brought in €1.84 billion in revenue, an 18% year-on-year decline, though this sales drop was 25% for the final quarter. This was the only region in negative growth for 2019, and considering China Unicom is about to go through its own 5G tender, the next few weeks will be a very nerve-racking time for the team. Failure with China Unicom could see the end of Nokia as any sort of force in the worlds’ largest telecoms market.

Chinese vendors win nearly all of China Mobile’s 5G business – there’s a shock

China Mobile, the world’s largest mobile operator, has completed the second phase of its 5G tender and 86% of the work went to Huawei and ZTE.

The news comes courtesy of C114.com.cn and is written in Chinese, so we’re once more indebted to our China correspondent for a translation, as Google Translate really struggles with that language. “China Mobile’s second phase 5G construction has selected bid winners, total investment CNY 37.1 billion. Huawei and ZTE combined win 86% of the total,” reads the headline.

The main event is the table below, which displays the following information, from left to right: Province | Number of base stations | Huawei | ZTE | Ericsson | China Information Communication Technologies Group Corporation. Underneath each vendor is the bidding price in CNY and the proportion of the base stations won.

Some of the mechanics of the bidding process remain a mystery, especially with such similar bids yielding such different proportions. In one province Ericsson seems to have out-bid CICT but got a smaller proportion of the work. Notable by its absence is Nokia, which apparently did get involved but failed to win anything.

While we’re sure everything about the bidding process was totally transparent and above board, it comes as no surprise to see the process dominated by Chinese vendors. All the aggro around Huawei and the US was already threatening a balkanisation of the technology industry and growing western criticism of China’s role in the coronavirus pandemic will surely only accelerate that process.

5G growth isn’t enough to compensate Chinese operators’ subs loss

The total recent decline in mobile subscriptions reported by China’s mobile operators totaled 20 million and the ongoing Covid-19 pandemic isn’t the only reason.

China’s three incumbent mobile operators have reported their latest results in the last few days. The numbers do not make happy reading. Put together, the three operators lost a total of 19.5 million mobile subs in February. Here is the breakdown:

Source: company reports, Telecoms.com summary

If the trend is nothing new, as the total subs have been going down for a while, the magnitude may be a surprise. A number of factors have contributed to the fall and the size of it.

The elephant in the room is apparently the coronavirus pandemic. Since late January China’s economy, and society as a whole, has been under a hard brake. In addition to the lack of demand from migrant workers and consumers holding their purse strings more tightly in general, mobile operators, beware of their balance sheet, have been controlling their subscriber acquisition cost and have largely scaled back their marketing investment. Another possible factor related to the pandemic is that, facing weak earning prospects, operators can be more active in clearing the inactive accounts on their networks, as a means to shore up ARPU by reducing the denominator. This is a normal “trick” used by operators everywhere.

A positive angle to read the numbers is to realised that the operators’ focus of investment has shifted to 5G. This has reflected in both strong 5G growth: China Mobile has clocked up over 15 million 5G subscribers four months after launch, including 8.7 million in February alone. China Telecom has signed up 10.7 million 5G subs, including close to 3 million in February. Such shift of focus has also reflected in fast reduction of subs on legacy networks. China Mobile lost 12.5 million 4G subs and close to 11 million 2G subs. China Telecom has stopped reporting its 4G subs numbers altogether.

Another recent contributing factor to the fast reduction and slow increase of subscriptions could be related to a new policy that came into effect on 1 December 2019. Facial recognition was added on top of photo ID when a new mobile account is opened, to ensure that the one opening the account is the same person as the legal ID cardholder. Operators may have also been retrospectively taking those subs that do not meet the new requirement off their database.

In general, we can expect to see continued reduction of total subs numbers reported by the Chinese mobile operators in the near future but the size of the reduction may become less drastic, as the effect of the new policy as well as investment focus shift will become normal business operations in the months and quarters to come.

Short-term improvement is expected when the worst of the Covid-19 impact in China is coming to an end. This may come less from the expected increase in migrant workers – since domestic roaming charge was done away with in 2018, there has been a marked reduction in demand for multiple local numbers – than from economic life gradually coming back to normal. The Financial Times reported that China is going to relax the restrictions on movement in Hubei, the earlier epicentre of the pandemic.

However, there may still be some caveat. On one hand, China’s economy relies heavily on export. While Europe and North America are in the thick of battling the coronavirus with lockdown measures expanding to more places by the day, there is little prospect for China’s export-oriented enterprises to resume active business any time soon.

On the other hand, there is a question mark over how credible to official line of “zero new cases” is. Caixin, a business media outlet that prides itself for independent reporting, and is speculated to have backing from high places, reported that, Wuhan, where the virus originated, has kept finding new asymptomatic Covid-19 cases but is not recording or reporting them. Information like this may well dampen consumer confidence, however upbeat the official narrative may be.

Chinese operators lose millions of subscribers

All three of the big Chinese mobile operators are reporting significant declines in their subscriber numbers, presumably due to the current exceptional circumstances.

BNN Bloomberg has been taking a look at the numbers and reports that in the first two months of this year China Mobile lost 8 million subscribers, China telecom lost 5.6 million just in February, while China Unicom experienced a 1.2 million decline in January. One likely treason for this is extra accounts held by migrant workers for their workplace, which became redundant while they were on lockdown to prevent the spread of coronavirus.

While the numbers seem big, they need to be viewed in the context of the subscriber totals, which are in the hundreds of millions. Having said that it’s distinctly abnormal for Chinese operators to experience subscriber declines of any sort, so this is definitely significant. It seems very unlikely, however, that people will choose this time to cancel all their mobile subscriptions.

There is going to be a lot of financial hardship thanks to people being unable to work, but in a time of social distancing and self-isolation staying digitally connected to the world is more important than ever. For that reason it would be surprising to see similar declines in western markets, where the same domestic economic factors don’t apply. Having said that it is reasonable to expect some ARPU declines as everyone tightens their belts.

China Mobile claims 15.4 million 5G subscriptions

We all know that China is a very large country, but sometimes numbers are just numbers and we forget just how big it actually is.

China might not have been one of the first to launch commercial 5G services, but its ability to aggressively ramp up is impressive. Not only is the company claiming to have signed-up 15.4 million 5G subscribers, it is also boasting about growing its 4G customer base by another 25.21 million.

In adding another 25.21 million subscriptions, China Mobile’s consumer customer base now stands at 950 million, 758 million of which are 4G. Just to put that into perspective, have a look at the table below:

Telco Country Subscriptions
EE UK 30.15 million
Telstra Australia 16.22 million
Proximus Belgium 6.31 million
Vivo Brazil 74.58 million
Orange France 35.35 million
Verizon USA 178.87 million
Telcel Mobile Mexico 76.92 million
NTT Docomo Japan 79.67 million
China Mobile China 950 million

Data curtesy of Omdia’s World Information Series (WIS) – figures accurate to December 31, 2019

On top of the 950 million mobile subscriptions, China Mobile has grown its broadband business to 172 million, a 17.1% year-on-year increase, and it also boasts of 884 million IOT customers. And while these numbers are almost too large for most telcos to comprehend, the venture into 5G is also very interesting.

The business is involved in 61 international 5G projects, owns more than 2,000 5G patents, has deployed and is operating more than 50,000 5G base stations, has more than more than 200 critical capabilities, and, as of February, has convinced 15.4 million people to sign-up to a 5G contract.

Despite these eye-watering numbers, China Mobile is not able to counter industry trends of eroding profit margins and mediocre growth.

“We were faced with a challenging and complicated operating environment in 2019 where the upside of data traffic was rapidly diminishing and competition within the telecommunications industry and from cross-sector players was becoming ever more intense,” said China Mobile Chairman Yang Jie.

Partly blaming Government pressure to upscale performance and bring down prices, profit attributable to equity shareholders and basic earnings per share both declined by 9.5%, while total operating revenues increased 1.2%. Revenues attributed to telco services only by a meagre 0.5%.

However, the telcos who can ride the wave of stagnation will be presented an opportunity should they be creative enough.

Emerging technologies are the driving force behind new business models, companies are embracing connectivity at the foundation of operations, while society is demanding digital as a basic requirement. China Mobile describes the future as a ‘blue ocean’ of opportunity, and while this might sound like needless consultancy talk, it is not inaccurate.

It might seem like we have been saying the same thing for years, but the companies who can weather the storm of inertia, scaling operations if not growing revenues, while also having the confidence to explore new products and services aggressively, will be very well position in the coming years.

China Mobile reportedly chasing cloud JV with Vodafone Idea and Bharti Airtel

Reports have emerged suggesting China Mobile is attempting to create a joint-venture in the Indian market to capitalise on the growing cloud segment.

Although these are nothing more than rumours for the moment, Live Mint has suggested senior officials from China Mobile have been in separate meetings with both Vodafone Idea and Bharti Airtel to set-up a joint-venture to tackle the cloud market.

“The top executives of China Mobile met senior managements of Bharti Airtel and Vodafone Idea separately in December,” stated an anonymous source. “China Mobile is interested in the Indian market and wants to come as a holding company with either of these two companies or even both.”

China Mobile has been aggressively growing its presence in the Chinese cloud market, though now it appears to be looking overseas for increased opportunities. India will of course look like an interesting opportunity, not only because of the size but the current market dynamics.

It is not overly complicated to understand the potential of India cloud market. As the second-most populous country on the planet, there are plenty of customers, though the drive towards digital has been very aggressive in recent years thanks to the disruption of Reliance Jio, effectively democratising digital. Attention has largely been paid towards the fight for consumer subscriptions, though the cloud market has also been growing.

As it stands, Bharti Airtel has a cloud services unit in ‘Airtel Business’, while it is also expanding its data centre footprint through ‘Nxtra Data’. Vodafone and Idea brought together their business units following the overarching merger between the telco parent companies and have also been working closely with Microsoft in recent months. Finally, Reliance Jio has a cloud business which was launched in August.

But it is the untapped potential which is getting foreign corporations excited. The digital economy is in its embryonic growth stages today, and the right investments could lead to significant gains in the future. Unfortunately for the Indian telcos, the current financial climate is not particularly helpful to speculative investment or aggressive expansion.

The Indian telcos are almost broke. A three-year long pricing war has crippled the spreadsheets, while the spectrum licence fee bill from the Government is eye-wateringly large. The Indian telcos are not in an attractive financial position, but this presents bargain opportunities for foreign investors who have deeper pockets.

China Mobile certainly fits into that category, and this could be a very co-beneficial relationship. China Mobile want to spread its cloud wings abroad through its investment arm, China Mobile Investment Holdings. India has an opportunity and the Indian telcos do not have the cash to capitalise on the potential today. Chinese money would certainly be welcomed to fuel the initial venture into the Indian cloud.

Interestingly enough, this could also have an impact on the geo-political tensions which have dominated the news for months.

The US does not like China, this is somewhat of an understatement, and it has been pressurising the Indian Government to break ties with Chinese infrastructure vendors. The emergence of a joint-venture, partly funded by a state-owned Chinese telco is not likely to have a positive effect on the already strained relationship between the US and India.

Nokia trumpets 5G wins in Saudi Arabia and China

Kit vendor Nokia has announced Zain KSA is all-in with Nokia’s 5G portfolio, while China Mobile is using its new massive MIMO gear.

Zain Saudi Arabia seems pretty keen on 5G, having announced its first 5G call back in May. It didn’t say anything about where it was getting its kit from at the time, but now seems to have given Nokia the green light to shout its deal win from the rooftops. Specifically the two companies have signed a three year deal, involving Nokia’s full 5G portfolio, to roll out 5G across Saudi Arabia.

Amr K. El Leithy, head of the Middle East and Africa market at Nokia, said:  “We are committed to transforming the service experience for Zain’s customers and enhancing industrial productivity by enabling extreme broadband services,” said Nokia’s head of MEA Amr K. El Leithy. “This contract, which includes 5G RAN, backhaul, security and services, demonstrates the breadth of our full-portfolio strengths and depth of global expertise in deploying these next-generation projects.”

Meanwhile over in China Nokia has also been given the all-clear by China Mobile to crow about the fact that the massive operator is the first to use its new 320W massive MIMO Adaptive Antenna. Apparently Nokia made this antenna specifically for the Chinese market and its massive bandwidth and coverage requirements, so it must be especially gratifying to see China Mobile snapping it up.

The development of the AirScale MAA with its industry-first 320W output is the direct result of input from the China Mobile team on what they needed to speed the deployment of 5G services to their customers,” said Mark Atkinson, Head of the 5G and Small Cells business at Nokia. “We look forward to continuing to work with CMCC as its 5G plans evolve.”

Nokia likes to bang on about its 43 commercial 5G deals at the end of its press releases these days, but tends not to mention that only 23 of them are with named operators and only five are currently live. Ericsson claims 22 publicly announced 5G contracts, with nine of them live. Huawei recently claimed 50 5G commercial contracts without naming any of the operators, so it looks like a tight race between the three of them.