Carriers partnering on 5G networks to cut costs amid accelerated rollout

2 min read
China Telecom’s booth at the Connect 2016 information technology conference and exhibition in Shanghai on September 2, 2016. (Image credit: Bigstock)

China Telecom said on Thursday it is partnering with other carriers in the construction of 5G infrastructure in order to reduce costs as the central government urges an accelerated timeline for next-generation wireless network rollout.

The announcement echoes a similar announcement made last week by China Unicom chairman Wang Xiaochu, who said the company would cooperate with other state-owned mobile operators, including China Telecom and China Mobile, to build 5G networks.

Why it matters: China’s telecom operators are cautious about their investments in 5G, which is forecasted to cost a total of RMB 1.23 trillion, according to securities firm China Securities International. The central government meanwhile is determined to become the world leader in 5G technologies and roll out 5G for commercial use within this year.

  • In June, the Ministry of Industry and Information Technology of China said in a guideline that mobile operators should cooperate on 5G infrastructure buildout to accelerate its completion.

Details: China Telecom has reached a tentative agreement with China Unicom to jointly build a 5G network which the two companies will share, said company chairman Ke Ruiwen at the press conference for its first-half 2019 financial results held on Thursday.

  • Ke said that the cooperation will bring great savings in capital and operating expenditure, without disclosing details.
  • Wang, the China Unicom chairman, said last week that the plan would save each company RMB 200 billion (around $28 billion) in 5G rollout costs over the next five years.
  • China Telecom is open to working with China Mobile, the country’s largest telecom operator, and the three carriers cooperate on building networks in remote areas, according to Ke.

Context: The three state-owned telecom operators are racing to roll out 5G services after receiving commercial 5G licenses in June.

  • China Telecom said it would invest around RMB 9 billion in the construction of 5G networks this year, while China Unicom said it would invest RMB 8 billion.
  • China Mobile said in March that its budget for 5G wouldn’t be more than that of 2018, which was around RMB 17 billion. But it increased its forecast to RMB 24 billion earlier this month and said no more budget will be added.
  • China promoted joint construction of telecommunication infrastructure when building its 4G networks.