Has China Mobile hit its 5G peak?

• China’s already massive telecom sector continues to grow
• Gains are being made each quarter in cellular and fixed line connections
• But China Mobile might have hit its 5G peak
• The market leader’s 5G package subscriber total saw a month-on-month dip in March

The already massive Chinese telecom services sector continues to grow each quarter, with each of the country’s three main network operators reporting sales and subscriber gains, but there are signs that, at least for market leader China Mobile, an important ceiling may have been reached as it reported a month-on-month dip in its 5G package subscriber base in March. 

In its latest quarterly financial report, which covers the three months that ended March 2024, China Mobile noted it had almost 996 million mobile customers, just 4.6 million more than at the end of 2023, so quite low total growth: That the numbers aren’t going up by as much as in recent years, though, is understandable in a country with a population of 1.41 billion people and three major telecom operators that, combined, have more than 1.7 billion mobile customers in total (more on that later).  

Of that total, almost 799 million had signed up to a 5G package, which means they are paying for a 5G subscription even if they are not yet able to use 5G services (due to network coverage or the lack of a suitable smartphone). The number of 5G package subscribers increased by about 4 million during the quarter. 

But China Mobile’s monthly customer data report shows that the number of 5G package subscribers actually dipped from almost 801 million in February to just below 799 million in March, suggesting that this particular metric might have hit its peak. 

The good news for China Mobile is that the number of those 5G subscribers that are actually hooked up to a 5G network and using the services, which the operator refers to as its 5G network customers (rather than package customers), continues to grow: At the end of March, the operator’s 5G network customer base hit 488 million, up from 465 million at the end of 2023, so there’s a lot more growth still to come.

China Mobile’s figures on the size of its wireline broadband business are also significant: By the end of March, its fixed broadband base surpassed 305 million customers, an increase of 2.7 million month on month. 

Turning to its financials, China Mobile’s first-quarter operating revenues increased 5.2% year on year to 263.7bn yuan (CNY) ($36.4bn), though its earnings before interest, tax, depreciation and amortisation (EBITDA) dipped by 2.3% to CNY 78bn ($10.8bn). 

The operator noted that it has made progress with what it calls its “digital intelligence transformation” and plans to accelerate “the cultivation and growth of emerging sectors of strategic importance, develop new quality productive forces at an accelerated pace, and establish ourselves as a world-class information services and sci-tech innovation enterprise.” 

Meanwhile, the country’s second-largest telco also reported customer increases during the first quarter. China Telecom added 3.88 million new mobile subscribers in the first three months of 2024 to reach a total of 411.65 million by the end of March. It reported an increase of 10 million for its 5G package options during the quarter to take its tally to 328.72 million. For China Telecom, that number continues to increase on a monthly basis too, up by almost 4.7 million in March alone, according to its monthly KPIs.  

The company also added around 2 million new fixed broadband customers to take its total to 192.22 million by the end of March. 

Alongside these numbers, China Telecom reported a 3.8% year-on-year increase in revenues to CNY 135.5bn ($18.7bn), while its EBITDA grew by 3.6% year on year to CNY 35.1bn ($4.84bn).  

Notably, the telco’s operating expenses (opex) were also on the rise in the period, up 3.6% year on year to CNY 124.9bn ($17.2bn). China Telecom highlighted increased network operations and support expenses, as the operator “continued to enhance its cloud-network service quality and capabilities, supporting the rapid development of Industrial Digitalisation and Smart Family services, while appropriately increasing investment in the buildup of capabilities”. 

The telco also saw its personnel expenses rise by 4.8% to CNY 28.8bn ($3.9bn) in the first three months of this year, due to “the strengthened recruitment of sci-tech and innovative talents, and increased incentives for frontline employees and high-performance teams”.

Earlier this week, we reported on China Unicom’s results for the first quarter of 2024. In a similar fashion to its domestic rivals, the telco also reported an increase in operating revenue, which was up 2.3% to CNY 99.5bn ($13.7bn). Its net profit jumped 8.9% to CNY 5.6bn ($773m) – the company did not provide an EBITDA figure. China Unicom had a total of 337 million mobile subscribers, 269 million of which were 5G package subscribers. The company’s fixed broadband subscribers reached 115 million in the first quarter, of which the net increase of gigabit broadband subscribers hit 2.11 million.

Combining the figures from the three major Chinese operators, their total mobile customer base reached 1.74 billion by the end of March, while their combined fixed broadband users amounted to more than 612 million.

- Yanitsa Boyadzhieva, Deputy Editor, TelecomTV