Chinese operators are leading on growth beyond core services, with non- telecoms services – both for consumers and enterprises – growing at 30% year-on-year in local currency (compared to less than 10% for most other major operators), according to a recent report by GSMA.
Globally, the key benefits of 5G other than speed gains (e.g. network slicing, edge computing, and low-latency services) are not widely appreciated, with many companies believing 4G is ‘good enough’.
But China is a clear exception. Early partnerships and trials from local operators have paid dividends, as evidenced by the widespread intent among companies in the country’s industrial sector to utilize 5G.
Chinese operators are also leading the charge for standalone (SA) 5G, which will help deliver the key benefits of 5G for enterprises.
Awareness and knowledge of 5G are rising as hype makes way for reality.
Chinese consumers are among the most excited by the prospect of 5G. They are generally more optimistic than other markets about the benefits of 5G, with greater expectations of lower service costs, innovative services and new connected devices.
In addition, consumers in China are likely earlier adopters of 5G (versus the US, Japan, and Europe) and seem the most willing to pay more for 5G services – a key driver of potential 5G consumer revenue uplift.
4G is by far the dominant mobile technology across China, accounting for more than 80% of total connections (excluding licensed cellular IoT). However, 4G’s share will peak in 2020 (at 82%) as 5G grows significantly.
Several 5G smartphones have been launched, many by local OEMs, and Chinese consumers are among the most keen to upgrade to 5G.
As a result, China will account for 70% of global 5G connections in 2020, and 5G adoption will grow to just under 50% by 2025, placing the country among the leading nations along with South Korea, Japan and the US.
To support this generational shift and drive consumer engagement, Chinese operators are expected to invest more than $180 billion between 2020 and 2025 in mobile capex, roughly 90% of which will be on 5G networks.
Despite some financial headwinds – including market saturation, increasing competition and the country’s ‘speed upgrade and tariff reduction’ policy – China’s mobile revenue remains stable.
Financials will recover in 2020 and 2021, and revenue will rise steadily at around 1% per year to 2025, largely because of growing revenues in enterprise IoT and new 5G services.
By the end of 2019, 1.2 billion people subscribed to mobile services across China.
This accounts for 82% of the region’s population and places China among the world’s most developed markets. As with all advanced markets, adding new subscribers is increasingly difficult, with the cost of reaching rural populations hard to justify against a challenging financial backdrop for operators.
Despite this, there will be around 60 million new subscribers by 2025.
Since 2012, the number of people subscribing to the mobile internet across China has doubled to more than 900 million. By 2025, nearly 260 million people will start using the mobile internet for the very first time, almost halving the unconnected proportion of the population to 22%.
Mobile continues to make a significant contribution to the Chinese economy.
In 2019, mobile technologies and services generated $759 billion of economic value added (5.4% of GDP) across China. This figure will surpass $900 billion by 2024 as the region increasingly benefits from the improvements in productivity and efficiency brought about by the increased take-up of mobile services.
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