China Mobile's 2016 revenue reached 708.4 billion next year to invest in 5G core network

Editor's Note: In the 4G era, China Mobile, China Telecom and China Unicom are competing in the domestic market. At present, China Mobile has shown an overwhelming advantage. China Mobile is the biggest winner with operating income of 708.4 billion yuan, China Telecom's revenue of 352.3 billion yuan, and China Unicom's 2016 revenue of 274.2 billion yuan. In the 5G era, China Mobile has clearly had a layout. In 2017, customers are expected to grow to 635 million. By 2020, if it can achieve a conversion rate of more than 30%, China Mobile's dominance in the 5G era is expected.

China Mobile said in Hong Kong on March 23 that the group currently has 535 million 4G subscribers and plans to add 100 million subscribers in 2017. By the end of 2017, China Mobile's 4G subscribers will account for 75% of the total subscribers. In addition, the Group will start investing a small amount of facilities such as 5G core network in 2018, and will invest in 5G wireless systems on a large scale in 2019.

In 2016, the three major operators achieved double harvests of revenue and profits. China Mobile is the biggest winner with operating income of 708.4 billion yuan and net profit of 108.7 billion yuan. China Telecom has a satisfactory performance, with revenue of 352.3 billion yuan and net profit of 18 billion yuan. Yuan; China Unicom is slightly inferior, with 2016 revenue of 274.2 billion yuan and net profit of only 625 million yuan.

The total operating value of the three is 1,334.9 billion yuan; the net profit is 127.3 billion yuan, and the average daily earning exceeds 100 million yuan. In terms of main business, traffic has become a major source of revenue for operators. For China Mobile, the revenue of wireless Internet access in 2016 exceeded the sum of voice and short multimedia messages for the first time, becoming the largest source of revenue. In addition, innovative business has emerged as a “small surprise” on the road to exploring innovative services for the three major operators.

It is worth noting that in 2016, China Mobile continued to show an “overwhelming” advantage, both in terms of profitability, 4G users, the number of base stations, and innovative services, all of which “strongly crush” the other two operators. The established facts of China Mobile’s own independence have been formed, and the “three-legged” once was difficult. Nowadays, no one can stop the Chinese move in the attack.

The 4G architecture is mainly for the mobile Internet, and the service target is mainly people; while the 5G is mainly to expand to the Internet of Things and realize the interconnection of all things. China Mobile's annual report shows that as of the end of 2016, China Mobile has built more than 100 million IoT connections, with related revenues of 4.4 billion yuan, a year-on-year increase of 26%. In 2017, it plans to add 100 million IoT connections. Li Yue said that in the future, the market space for communication between people and people is limited, and the industry should strive to open up a broader new market between people and things, things and things.

Traffic revenue "overtaking" innovative business emerged

According to China Mobile's report, wireless Internet revenue increased by 43.5% compared with last year, accounting for 46.2% of communication service revenue. For the first time in the year, it exceeded the sum of voice and short multimedia message revenue, becoming the largest source of income. On China Telecom's side, the total mobile Internet traffic of the year increased by 130% year-on-year. The total traffic of 4G mobile Internet access increased by nearly 3 times year-on-year, and the monthly average traffic of 4G users entered the GB era. In the whole year, mobile Internet revenue increased by 43% year-on-year, which promoted the steady improvement of mobile ARPU; mobile service revenue increased by 10.5% year-on-year, and the growth rate was leading in the industry. Although China Unicom did not give specific data, the average monthly data traffic of 4G users reached 1,521MB.

It can be foreseen that the future traffic management will become the main business of the three major operators, and it is not excluded that there will be multiple business models for “traffic management”. The author believes that in 2017, there will be a lot of packages with unlimited traffic like “ice cream”.

In the annual report, the three major operators mentioned that they will continue to reduce capital expenditures. China Mobile plans to reduce overall capital expenditure by 6% in 2017, with 4G networks down 10.6% and cable broadband access down 47.2%. China Telecom plans to cut its capital expenditure by 8.1% in 2017. China Unicom's capital expenditure has fallen by 46% in 2016, and plans to continue to cut 38% in 2017, from 72.1 billion yuan in 2016 to 45 billion yuan.

China Mobile launched a large-scale commercial 5G test in 2019

China Mobile said it will conduct a large-scale pre-commercial 5G test in 2019. Wang Xiaoyun, general manager of China Mobile Technology and vice chairman of China's 5G promotion group IMT-2020 PG, said that China Mobile will launch a new phase of 5G field trials in seven locations or cities this year.

Wang Xiaoyun said that China Mobile's 5G test will be carried out in two phases. The first phase focuses on key technology verification and the second phase is product verification. In the Global 5G Test Summit at the World Mobile Congress, Wang Xiaoyun said, “Now, we have completed the field test of key technology component verification. From this year, we will focus on the proof of concept of system field test, and in 2018 in 2018 Site or city enters pre-commercial testing of [interoperability] testing."