China’s three major telecoms operators are expected to incur more than 300 billion yuan of capital expenditure in 2012 on the back of intensifying competition for 3G users, and the need to accelerate the pace of broadband development, reports China Securities Journal.
According to an unnamed analyst, another round of huge capex spending is expected in 2014 as China Mobile (0941.HK) ramps up trails of its 4G network.
China Mobile added 30.51 million new 3G users in 2011, bringing its total 3G user base to 51.21 million, or a 40 percent market share, down from the 85 percent market share it had during the 2G era.
China Unicom (600050, 0762.HK) and China Telecom (0728.HK) had respective 3G market shares of 31 percent and 29 percent.
The industry is expecting China Mobile to record capex spending of about 150 billion yuan in 2012, down six percent from 2011 as higher spending on the TD-SCDMA network will be offset by the lower investment requirements of its 2G network.
According to Oriental Securities, following the maturing of the TD-SCDMA industry chain, investment in the TD-SCDMA network by China Mobile is expected to top 50 billion yuan in 2012.
An unnamed brokerage forecasts a 15 percent year-on-year increase in capex spending to 97 billion yuan by China Unicom in 2012 in order to meet the needs of its rapidly increasing 3G user base.
China Unicom added 25.05 million new 3G users in 2011 and there were industry rumors that the operator is targeting to add 50 million new 3G users this year.
Separately, China Telecom and China Unicom were alerted to the increasing likelihood of greater competition in the broadband market following the anti-trust investigations at the end of last year, leading to increased investments in broadband development by the two market leaders in order to fend off competition.
At present, telecoms operators occupy a 90 percent share of the broadband access service market, with cable TV operators having only a five percent market share.
In a move to encourage broadband development, the Ministry of Industry and Information Technology published guidelines for the promotion of Wireless-Optical Broadband Access Network (WOBAN) in April 2010.
Investment in WOBAN was forecast to top 150 billion yuan over the next three years, and this is expected to add more than than 50 million new broadband users.
Shares of China Unicom (Hong Kong) rose 2.34 percent to trade at HK$13.98 per share at 11:20 today.
Source:cn-c114