China dominates 5G but spending tails off

China will hit 1 billion 5G users within a couple of years, new research shows, and operators may have already passed the peak of investment in the technology.

The world’s biggest mobile market is set to reach the 1 billion milestone by 2025, becoming – unsurprisingly – the first to do so, according to new predictions published by the GSMA this week.

The industry body forecasts that 5G connections in China will reach 1.6 billion by 2030, accounting for nearly one third of the global total. In the nearer term, 5G will overtake 4G as the dominant mobile technology in China as soon as next year.

These figures can hardly come as a surprise. Market leader China Mobile had 978.6 million mobile customers at the end of February, including 639.1 million 5G package customers. At the same date China Telecom’s 5G package customers numbered 278.2 million, while China Unicom claimed 219.8 million. That’s well over the billion mark already, although the figures refer to customers having signed up to 5G tariffs, rather than those actually using the 5G network.

The two smaller players do not share figures for actual 5G users, but in its recently published annual results statement China Mobile disclosed that it had 327 million 5G network users, the growth rate for those and for 5G package users both coming it at over 58% year-on-year.

If China Telecom and China Unicom have a similar proportion of 5G network customers as their larger rival – i.e. just over half, based on year-end numbers – then we’re at around 600 million in total and rising fast. That 1 billion milestone seems attainable.

China’s telcos have ploughed some serious investment into 5G to get to this point. The GSMA puts the number of 5G base stations in China at more than 2.3 million at the end of 2022, with 887,000 having been added during the course of the year.

It predicts that operator capex will come in at US$291 billion during the 2023-2030 period, a massive 95% of which will be spent on 5G.

However, there are indications that operator spending on 5G is tailing off.

In its annual results presentation delivered late last week, China Mobile forecast a decline in capital spending for the current year compared with last, driven by a fairly hefty fall in 5G investment. The operator’s overall 2022 capex came in at 185.2 billion yuan, up slightly on 2021 but down as a percentage of revenue. Of that figure, CNY117.1 billion was connectivity-related, including CNY96 billion (almost US$14 billion) spent on 5G.

Its outlook puts 2023 capex at CNY183.2 billion, including CNY83 billion on 5G connectivity, which equates to about $2 billion less than last year. That’s no small chunk of change.

The reduction tallies with what we would expect from a mature 5G market though. As Dell’Oro pointed out at the start of this year, telcos in the world’s more advanced 5G markets are passing the peak of investment in the technology, and we have already seen evidence of that in the US. T-Mobile US said it expects 2022 to be the height of its 5G spend, while Verizon said its C-band investment peaked last year too.

It stands to reason then that China’s big three would be in a similar position. We can be sure of one thing though: the telcos will not stand still when it comes to technology, particularly with 6G on the horizon.

China Unicom, for example, expects to start trialling 6G applications as soon as 2025, it emerged this week. China’ 5G leadership is based on both volumes and speed of rollout. With 6G, the country aims to be in vanguard of development.

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