Portfolio | China telecoms operators expanding apace
Analysts return positive assessments of the sector as China Unicom shakes off mid-year woes
Strong November figures for China’s big three telecommunications network operators have cooled market talk over possible consolidation in the tightly-regulated sector.
The number of subscribers on 3G and 4G networks increased by 24.65 million, of which 20 million went to market leader China Mobile, according to Credit Suisse. The total number of mobile subscribers grew by 1.9 million, slightly down on October but an improvement on April to August.
“We believe that the China telecoms sector is currently enjoying a secular growth story,” wrote Credit Suisse analyst Colin McCallum in a research note this week, pointing to rising smartphone penetration, 4G subscriptions and data use.
China Unicom has been in the spotlight since registering a weak first half, with lacklustre mobile revenue and subscriber attrition from data plans. But last month it outperformed rival China Telecom, albeit from a lower base, adding 3.75 million 3G and 4G users.
The top bosses at China Telecom and China Unicom swapped positions in August – not the first time Beijing has played musical chairs with the leadership of the big three – after Unicom fell behind in mobile revenue and 4G coverage expansion.
Analysts say the reshuffle – which also saw a former senior regulator from the Ministry of Industry and Information Technology join China Mobile as its new chairman – means the sector is unlikely to be restructured in the near term.
“We think the government could perhaps give some time for the new [China Unicom] management team to turn around its operational performance,” wrote Daiwa analyst Ramakrishna Maruvada last month.
