Is it possible for China Unicom and Telecom to save 200 billion yuan by building 5G network?

 Is it possible for China Unicom and Telecom to save 200 billion yuan by building 5G network?

The 5G frequencies of the two are very close.

Earlier, Wang Xiaochu, chairman of China Unicom, said at the semiannual communicating meeting of China Unicom on August 14 that due to the huge investment in 5G, the government encouraged operators to build and share resources together. China Unicom was negotiating with mobile and telecom on 5G network cooperation respectively.

Ultimately, China Unicom and China Telecom hand in hand because of 5G success. In fact, the 5G frequencies of China Unicom and China Telecom are very close. Earlier, China Unicom and China Telecom obtained about 100M frequency resources in 3.5GHz band, and the frequency of 4G is similar.

In the area of network construction, China Unicom and China Telecom will construct 5G network in 15 urban districts: with the total scale of 4G base stations (including chambers) of both sides as the main reference, Beijing, Tianjin, Zhengzhou, Qingdao, Shijiazhuang, five northern cities, and the construction area of China Telecom and China Unicom Operating Company. The ratio is 6:4; Shanghai, Chongqing, Guangzhou, Shenzhen, Hangzhou, Nanjing, Suzhou, Changsha, Wuhan and Chengdu are 10 cities in the south, and the ratio of Unicom Operating Company to China Telecom Construction Area is 4:6. Unicom will independently build 9 cities in Guangdong Province, 5 cities in Zhejiang Province and 8 northern provinces outside the aforementioned areas; China Telecom will independently build 10 cities in Guangdong Province, 5 cities in Zhejiang Province and 17 southern provinces outside the aforementioned areas.

At the semiannual report communication meeting in August, China Telecom Chairman Craven also indicated that the two sides complement each other in many resources. At the transmission network level, China Unicom has rich resources in the north, China Telecom has more resources in the south, and China Unicom also has rich resources in the construction of mobile network in the south.

It can be seen that in the distribution of the 5G network construction area, the two sides have indeed achieved complementary advantages.

From the front-end 5G userspoint of view, the two companies share a network, the user experience will not be much different. However, the industry is still worried that both sides should compete for 5G users after all, and there has been a positive competition in business development. How to solve the relationship between competition and cooperation will be a test.

Are they expected to save 200 billion yuan each?

In its announcement, China Unicom said that the co-construction and sharing of 5G networks with China Telecom, especially the continuous 5G frequency sharing between the two sides, would help reduce the cost of 5G network construction and operation and maintenance, and effectively achieve 5G network coverage.

In the first half of this year, China Unicoms main business revenue declined by 1.1% to 132.96 billion yuan, and its net profit increased by 16.8% to 3.02 billion yuan. In the first half of 2019, China Telecoms revenue fell by 132% to 1904.9 billion yuan, and its net profit rose by 25% to 1391 billion yuan.

For operators to build a 5G network, Zhang Xinsheng, Secretary-General of the Communication Science and Technology Committee of the Ministry of Industry and Information Technology, said in an interview with Daily Economic News that personal support for this way of Co-construction and sharing can speed up the pace of 5G construction in China.

According to the early disclosure, Unicom will maintain the expected annual investment of 8 billion yuan in 5G, plans to deploy 40,000 base stations, China Telecom maintains the investment plan of 9 billion yuan in 5G this year, and plans to build about 40,000 base stations by the end of this year. China Mobile plans to invest 24 billion yuan in 5G and build 50,000 5G base stations this year. However, the 5G construction mode of China Radio and Television is still unclear, and its ambiguous cooperation target is China Mobile.

For the cooperation between the two giants, in the view of some industry insiders, this will inevitably reduce the number of 5G base stations, reduce the demand for 5G network construction equipment, and reduce the procurement of Listed Companies in the industrial chain and China Railway. Fu Liang told Daily Economic News that the cooperation between the two sides, or the advantage of the China Railway Tower, because after Telecom and Unicom share access network, only one company and China Railway Tower need to negotiate at the same point, China Railway Tower has a large number of customers. China Mobile has little impact on China Mobile. The market share of Telecom + Unicom is lower than that of China Mobile, and there is no change in the short term.

Source: Daily Economic News Responsible Editor: Zhong Qiming_NF5619