Nokia is so keen for everyone to know how well it’s doing in China that is it makes an announcement every time it wins some business.
Earlier this year we heard all about a ‘framework agreement’ signed with China mobile that was worth around €1 billion. Today Nokia has announced some more ‘frame agreements’, which are presumably the same thing and refer to a kind of pre-contract that amounts to a formal commitment to do a bunch of business in future.
This time we’re talking €2 billion, but split between all three Chinese MNOs – China Mobile, China Telecom and China Unicom. Presumably the China Mobile bit is fresh cash, not just a recycling of the previous bil. The agreements cover delivery for the next year or so of radio, fixed access, IP routing and optical transport equipment, as well as some SDN and NFV goodness. Nokia is excited by all this transitioning and leveraging.
“We are excited to continue our close collaboration with these important customers in China, to drive new levels of network performance as they transition toward 5G,” said Mike Wang, president of Nokia Shanghai Bell. “Leveraging the breadth of our end-to-end network and services capabilities, we will work closely with China Mobile, China Telecom and China Unicom to deploy technologies that meet their specific business needs.”
It wouldn’t be surprising to see some kind of equivalent announcement by Ericsson before long as the two Nordic kit vendors clearly like to compete over this sort of thing. Not long after its first China Mobile announcement Nokia said it was getting £3.5 billion from T-Mobile US to help out with 5G. Within a few weeks Ericsson had countered with an almost identical announcement of its own.
China Unicom has released its financials for 2017 and it is looking like a money making machine again. Revenues were up marginally, profit tripled and free cash flow grew 1628% compared to the previous 12 months.
Total revenues for the years stood at $43.488 billion, a marginal 0.2% increase, with mobile service revenue increasing by 7.9%. The winner for improvement here though was net profit, standing at roughly $289 million, a 192% increase from 2016. This number may well have been higher if not for a one-off asset write off of 2.9 billion Yuan, roughly $460 million. Investors might want to see a higher margin, but at least trends are heading in the right direction.
“Looking ahead, the Company is embarking on a new historic journey and will seize firmly the brand new opportunities brought by global technological and industrial reform, China’s economic development model reform and mixed-ownership reform, aiming to instil into China Unicom new DNA, new governance, new operation, new energy and new ecology,” said Wang Xiaochu, CEO of China Unicom.
While the company has attributed some of the increased profits to increased subscriber numbers as well as a significant reduction in the CAPEX across the year, it certainly is a good sign for a company which is undergoing some pretty notable changes. The Chinese government is using China Unicom as a testbed for a new ownership structure. Following a private placement earlier this year, Alibaba, Tencent, Baidu and JD.com have become new shareholders and board members of China Unicom’s parent company China United Network Communications.
The team has pointed towards leveraging external resources and capabilities as one of the key aspects of the successful year, which is a promising sign for the industry in China moving forward. That said, a lot of corporate jargon was including in the statement, which could end up meaning very little in the long-run.
Dutch telco KPN has cosied up to China Unicom to improve its access to the Chinese IoT market and will return the favour in Europe.
The two companies will offer reciprocal access to each other’s IoT networks, making use of remotely provisionable SIMs in IoT devices that allow switching to the cheaper network depending on where the device happens to find itself. Europe, of course, has gotten rid of roaming premiums so KPN’s domestic tariffs apply across the continent.
“This agreement will enable our customers to become global IoT players, since we are able to handle international requests quickly and easily,” said Carolien Nijhuis, Managing Director of KPN IoT. “We are constantly looking for strong partnerships and have found a trusted partner in China Unicom.”
“It’s really an exciting moment that China Unicom will be able to provide a global IoT solution partnering with KPN,” said Li Chong (Chairman, China Unicom Global Ltd) and Chen Xiaotian (General Manager, China Unicom IoT Business Unit), apparently in unison. “With this solution we are offering ‘one SIM, one portal, one experience’ to our customers. The partnership between China Unicom and KPN will enable Chinese and European enterprise customers to bridge the digital gap between global IoT deployments.”
The two operators will also offer a unified connectivity management portal, but how companies will track and manage their IoT devices when they’re not in either Europe or China remains a mystery. The trick is presumably to fly over Russia, India and the Middle East as quickly as possible and cross your fingers.