Since late January 2020, the outbreak of the new epidemic in China has led to hundreds of millions of people in a state of limited travel. One of the most important results observed by omdia is that the pandemic has had a negative impact on the mobile customer base of three Chinese telecom operators. In February 2020, the new crown epidemic forced three Chinese telecom companies into a rare situation - the number of mobile users of all companies dropped sharply.
Omdia believes that this is because the new crown epidemic has seriously affected the physical channels of Chinese telecom operators, thus hindering the development of new mobile users. At the same time, mobile users (especially migrant workers) may also stop using their second SIM card or smart phone unnecessarily, as their daily use scenarios are limited due to strict travel control during the outbreak.
The results of Chinas three major telecom operators performance reports for the first half of 2020 are in line with omdias expectations - Chinas mobile subscriber growth has resumed, with a total net increase of 5.88 million mobile subscribers in the second quarter of 2020.
Before the new crown epidemic, Chinas mobile service revenue shows a downward trend in 2019, which is mainly due to the sharp price reduction of mobile data packages due to the fierce competition among the three major telecom operators in China. In addition to the possibility of tightening consumer spending due to the new crown epidemic this year, omdia forecasts that mobile service revenue in China will continue to show a downward trend in 2020.
However, in terms of the rate of decline in mobile service revenue, omdia expects to see an improvement in 2020 compared with 2019, driven by the popularity of 5g in China. Specifically, omdia predicts that the overall ARPU of Chinas mobile services will decline slightly in 2020 - the popularity of 5g will help ease the downward trend of ARPU for overall mobile services.
China telecom operators performance in the first half of 2020, released in August, proves this. According to the data released by China Mobile, the ARPU of mobile services of China Mobile in the first half of 2020 was 50.3 yuan, only 3.7% lower than that in the first half of 2019, an encouraging improvement compared with a year ago - in the first half of 2019, the ARPU of China Mobiles mobile service decreased by 10.1% to 52.2 yuan compared with the same period in 2018. China Telecom also mentioned that once it moves from 4G technology, its mobile service ARPU of 5g users can be increased by about 10%.
Omdia predicts that mobile service revenue in China will decline slightly by about 1% in 2020, as 5g penetration is still relatively low compared with Chinas total mobile user base. As the economy gradually recovers from the new epidemic situation in the future, omdia predicts that in the forecast period, with the increase of 5g users in China, the mobile service income in the Chinese market will show a positive development trend.
5g popularization acceleration is supported by 5g deployment acceleration and 5g mobile phone shipment
Omdia pointed out that the new crown epidemic did affect the 5G deployment in most parts of Chinese mainland, because deployment of 5G network during the period of blockade or restricted travel is not easy. According to Chinas three major telecom operators, about 80% of 5g network deployment was implemented as planned in the first two months of 2020.
However, omdia expects Chinas 5g deployment to accelerate in the post epidemic era. In March 2020, all three Chinese telecom operators have disclosed their ambitious targets to achieve 5g coverage in all cities of the country at or above the county level by 2020.
In the July forecast report of omdia, another major factor considered by omdia in the prospect of 5g users is the strong shipping volume of 5g mobile phones in China. Omdias expectation is that demand for consumer terminals will gradually recover as the pandemic subsides. Chinas Ministry of industry and information technology disclosed in June this year that by the end of 2020, the cumulative shipment of 5g mobile phones is expected to exceed 180 million.
As a result, omdia has raised its forecast for the number of 5g subscribers in China in the near future, compared with previously released forecasts - due to the acceleration of 5g deployment and strong 5g mobile phone shipping momentum.
In addition to 5g network deployment and consumer demand for 5g devices, omdia believes that 5g applications are still an important factor affecting 5g penetration in China. Up to now, VR / AR, cloud games and 5g live broadcasting are the main 5g applications for Chinese consumers, but whether they have enough attraction to promote user network migration remains to be seen.
Fixed broadband demonstrates its value by meeting multiple needs during an epidemic
Omdia predicts that the new outbreak will lead to a surge in the use of fixed broadband services. The company expects fixed broadband subscribers to continue to grow in China, with a compound annual growth rate of 1.6% over the forecast period of 2020-2024.
In the Chinese market, users are gradually adopting Gigabit speed fixed broadband services. According to the data of the Ministry of industry and information technology of China, by June 2020, the number of fixed broadband users with an access speed of more than 1000 Mbps has reached 2.67 million nationwide, an increase of 1.8 million over the end of 2019.
At the same time, Chinese telecom operators are improving their fixed broadband service experience by launching innovative products. In April 2020, China Unicom Beijing, in cooperation with Huawei and vipkid, launched an AI fixed broadband solution for online learning, which can reduce the delay of online education services by more than 50% by using AI technology. In August 2020, China Telecom and Tencent jointly launched an optional fixed broadband service for games. The service aims to provide customers with exclusive network bandwidth guarantee for downloading and upgrading games, and supports network acceleration for multiple games.