A 2016 network-sharing agreement between China Unicom and China Telecom helped drive a 16% year‑on‑year decline in China’s LTE capital expenditure, according to a recent IHS Markit analysis.
Findings from IHS Markit’s report “2017 Mobile Infrastructure: China Annual Market Tracker” highlight that China, which has the world’s largest mobile subscriber base, reached 1.3 billion mobile subscribers in 2016. Of those subscribers, 64% were served by China Mobile’s GSM/TD‑SCDMA/LTE networks. LTE adoption across the country surged to 58% of subscribers in 2016, up from 32% in 2015.
Although the China Unicom–China Telecom sharing arrangement contributed to the decline in LTE capex, the two operators’ deployment of FD‑LTE (frequency‑division LTE) eNodeBs together with China Mobile’s continued TD‑LTE (time‑division LTE) expansion resulted in a combined deployment of 1,020,000 eNodeBs in 2016—the same total as in 2015, IHS Markit notes.
On the whole, China’s mobile infrastructure market for 2G/3G/LTE hardware contracted by 9% year‑on‑year in 2016, falling to USD 12 billion. This reduction occurred while China Unicom and China Telecom pursued nationwide FD‑LTE rollouts. LTE equipment revenue slipped by roughly USD 10 billion, a 4% decline year‑on‑year, supported by largely flat eNodeB deployment. At the same time, combined 2G and 3G equipment revenue remained under USD 2 billion.
IHS Markit forecasts further weakness in China’s macro mobile infrastructure hardware market, anticipating another double‑digit decline in 2017 as the period of massive LTE rollouts comes to an end. The analysis also projects continued deceleration in the RAN and packet‑core infrastructure market, expecting it to shrink to USD 2 billion by 2021—a compound annual decline of about 34% from 2016 to 2021.