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The three major operators achieved revenue in both 2017 and profit growth. After China entered the 4G era, operators' collective “double increase” was the first time.
On March 28th, China Telecom released its 2017 financial report. During the reporting period, China Telecom achieved a total revenue of 366.229 billion yuan, an increase of 3.9% year-on-year. Revenue after deducting terminal sales was 331.044 billion yuan, a year-on-year increase of 6.9%. Profit attributable to shareholders reached RMB 18.617 billion, an increase of 3.3% year-on-year.
So far, the three major operators in China released their financial reports in 2017. In 2017, China Mobile Communications Service revenue was 668.4 billion yuan, an increase of 7.2% year-on-year, net profit was 114.3 billion yuan, an increase of 5.1% year-on-year; China Unicom's communications service revenue was 249.02 billion yuan. 4.6% year-on-year increase, net profit 1.83 billion yuan, an increase of 192.5%.
It is worth mentioning that the three major operators achieved revenue in both 2017 and profit growth. After China entered the era of 4G, it was the first time that operators collectively “increased”. Before that, China Unicom’s revenues and profits continued to decline. China Mobile’s revenue in 2015 decreased while China Telecom’s profits shrank in 2016.
After entering the 4G era in December 2013, the user’s dividends disappeared. The three major operators sought growth under the ceiling of the telecommunications market, and they continued to stage increasingly fierce customer battles. At the same time, they continued to try for four years. The reform, transformation, and finally maintained a relatively stable buffer period in this competition.
Low cost competition
The 4G in 2014 is China Mobile's thriving, first-mover advantage of the license, strong cash flow, and mature industrial chain making China Mobile a dusty place.
In 2015, Telecom and China Unicom began to expand capital expenditures to build 4G networks. However, this year, 1.1 million mobile 4G base stations reached the summit and became the world’s largest 4G operator, while the number of telecommunications Unicom’s base stations is less than 900,000. It's hard to see it on the road to travel.
In 2016, the transformation came, China Telecom and China Unicom launched the strategic cooperation of “co-construction and sharing of resources” at the beginning of the year. The two companies cooperated in the five major areas of network construction and sharing, and the entire network access terminal. This cooperation shortens the three operators. Inter-network gaps quickly filled up telecommunications, and China Unicom's industrial chain was short-circuited, raising the balance between the two operators and mobile competition.
By the end of 2016, the proportion of terminals in China Netcom has exceeded 70%. Terminals are no longer the threshold at which operators restrict each other's competition. On this basis, China Unicom and China Telecom also launched ultra-high performance-price ratio services such as Internet cards and large flow cards. To seize new users, and compete for mobile users' second slot.
As these businesses are characterized by 'low consumption and high traffic', for young users with extremely high traffic demand, operators can get rid of the development model that had previously been highly dependent on business offices, social channels, operating room costs, and channel commissions. , The user's development cost is extremely low. The price war that this low-cost competition causes, has also gradually become the main theme of 2017.
The 2017 financial report shows that China Telecom’s annual net increase in 4G subscribers was 60.17 million. Among them, 'large flow users' approached 60 million. China Unicom’s net increase of 4G subscribers totaled 70.33 million, including low-cost acquisition of 2I2C (Internet) Card) Users 50 million households. In the same period, China Mobile 4G users increased by a net 114 million.
It should be pointed out that although telecommunications and Unicom have occupied a large number of new markets with price wars, their 4G users' quality is not weaker than China Mobile. The financial report shows that in 2017, China Mobile 4G users DOU (monthly traffic usage) was 1.76GB, ARPU (monthly average spending) 66.4 yuan. While China Telecom 4G users DOU is 2GB, ARPU is 65.5 yuan, China Unicom 4G users DOU, ARPU were 4.5GB, 63.4 yuan.
The ARPU of the 4G subscribers of the three operators is almost the same. For telecom, Unicom simply provides more traffic than mobile. Since the marginal cost of traffic tends to zero, Telecom does not actually have any additional cost, which means three operations. Business 4G users gain close to.
In 2017, the total number of 4G subscribers for telecom, mobile, and Unicom reached 1.82 billion, 650 million, and 175 million. Although the mobile market share still exceeds 50%, Unicom still maintains a relatively high growth momentum.
According to the latest monthly data, in January-February 2018, China Mobile added 12.32 million new 4G subscribers, while Telecom and China Unicom had 11.29 million and 12.26 million subscribers, respectively. The result is obvious.
2G withdrawal countdown
After the 4G growth was flat, the competition of the three operators began to brake one after another.
In 2017, the number of Telecommunications, Mobile, and China Unicom 4G base stations reached 1.17 million, 1.87 million, and 850,000, totaling 2.89 million. After the gradual improvement of 4G network coverage, operators are gradually adjusting their capital expenditures. 2017, Telecom, Mobile, China Unicom’s capital expenditures were 88.7 billion yuan, 177.5 billion yuan, 42.1 billion yuan, and a total of 308.3 billion yuan. According to the 2018 budget, the budget expenditures of the three operators were 75 billion yuan, 166.1 billion yuan, and 50 billion yuan, respectively. 291.1 billion yuan, a total reduction of 17.2 billion yuan over the total in 2017. In addition to the new Unicom plan that introduced funds through mixed reforms to increase spending, Telecom, Mobile has been reducing expenditures.
In fact, operators are more eager to migrate 2G and 3G users to 4G than to further increase their competitiveness.
As of the end of February 2018, China Mobile had 895 million subscribers, of which 233 million were non-4G subscribers; China Telecom had 259 million mobile subscribers, among which 63 million were non-4G subscribers; China Unicom had 290 million mobile subscribers, of which, Non-4G users 103 million.
Of the total 1.444 billion mobile subscribers, there are 399 million 2G/3G subscribers, accounting for more than 27.6%, of which 2G subscribers are close to 300 million subscribers.
'As soon as possible, 2G users can migrate to 4G and push 2G to withdraw from the network. This is a key task for this year. 'A multi-person operator told 21st Century Business Herald reporter: 'The group has no longer assessed users' additions to provincial companies, but started to put 2G's Excluding the assessment index included in the network. 'China Unicom has said in its financial report, 'Accelerate the promotion of 2G migration 4G', 'Effective use of resources, to promote 2G/3G network frequency reduction.'
2G users generally have low consumption, and their ARPU is even less than 1/3 of that of 4G users. By shifting 2G users to 4G, revenue can be increased through traffic management on the one hand, and user stickiness can be increased through traffic services on the other hand to avoid large areas. User drain.
In fact, more than 20 operators in countries including Japan, South Korea, the United States, and Singapore have officially closed down 2G networks and completed the migration of users. In China, the Ministry of Industry and Information Technology has officially authorized operators to implement 2G spectrum recultivation. Operators have also tried in various provinces one after another, but they have not formally announced the launch of the 2G withdrawal schedule. According to the above-mentioned operators, 'the large domestic provinces, there are still many 2G users, 2G's industrial chain is still there, and there are still Lots of complicated work to do.'
After 2G has gone offline, the high-quality frequency band originally used for 2G can be reused, and 2G spectrum can be used for 4G network and NB-IoT network construction, which can achieve lower construction costs.
In fact, taking into account the 5G pilot project in 2018, the 5G large-scale commercial application in 2019, the three major operators who have just entered the 4G stable period, have started to increase revenues and reduce expenditures to prepare for 5G reserve resources.