China Unicom & China Telecom On Course for 5G Network Sharing
China Telecom and China Unicom appear certain to jointly build and share 5G network infrastructure, with the chairmen of both telcos confirming they are actively seeking a partnership.
Such public declarations about the move, first reported last week following comments during earnings presentations, make clear that network sharing is the preference of officials at the telecom regulator, the MIIT and the state asset management agency SASAC, as well as the operators.
China Telecom chairman Ke Ruiwen told analysts during a results briefing that the companies had reached "a high consensus" on joint construction and sharing and had set up a team to explore how to move forward. He noted that such collaboration would help to significantly reduce capital expenditures and operating expenses, as well as revitalize share prices.
His China Unicom counterpart, Wang Xiaochu, said China's smallest operator would "definitely participate" in one or more 5G collaborations.
Unicom is also negotiating with China Mobile on roaming cooperation in rural areas, "so that Unicom users can enjoy the 5G service experience across the entire network," he said.
However, he said the company was "more inclined to build and share with China Telecom."
The two companies have had a cooperation agreement in place to share 4G base stations and optical networks since 2016.
Besides offering a way to ease the eye-watering price tag of 5G rollouts, weak industry growth is a catalyst for such agreements. According to MIIT figures, China's telecom services market has begun to contract for the first time: Total revenue for the first half shrank 0.03% year-on-year, while for June it declined 1.1%.
Ke Ruiwen said the joint rollout and sharing should be focused on the wireless access and transmission networks, which account for more than 80% of the capex. "At the same time, the core network and the business platforms [need to] remain relatively independent in order to differentiate customer service," he said.
China Unicom's Wang said the biggest advantage of the two telcos was that their allocated 5G spectrum "is very close and can improve efficiency." Combined, Telecom and Unicom have between them 200MHz of contiguous spectrum in the 3.5GHz band, issued for 5G purposes last December.
The sharing of resources meant faster bandwidth and more efficient use of spectrum, Wang said. The arrangement would be relatively simple, he said. The two sides would reduce cost through joint construction and maintenance while keeping their own brands and customers. Ke said the long-term goal for the two operators would be to jointly build a standalone 5G network.
But with the specifications yet to be finalized, currently, discussions were focused on issues around network sharing in non-standalone (NSA) mode. Ke confirmed that while the negotiations were underway, China Telecom would continue with its plan to deploy 40,000 5G base stations this year. He admitted there would be some overlap with Unicom, but the rollout could not stop while an agreement was reached. If the two sides struck an agreement Telecom would "make some partial adjustments to these base stations… the cost will not be especially high," he said.
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