China Mobile focuses on 4G; shuts down 3G base stations

4G expansion has become a “focal point” for China Mobile, with the operator’s local units beginning to decommission 3G-only base stations.

The Chinese market leader and world’s largest mobile operator saw 200 million customers join its LTE network over the past year, bringing its total number of 4G customers up to 312 million at the end of 2015 – up from 90 million the previous year. Its overall subscriber numbers grew by 2.4% to 826 million.

China Mobile’s rapid push towards 4G in 2015 was likely motivated at least in part by the failure of the indigenous TD-SCDMA standard to hold its own against rival 3G technologies. As a result, the operator’s local units have begun shutting down base stations that use the domestic TD-SCDMA technology. While an anonymous employee has described the move as an “irresistible trend”, China Mobile has denied that it is part of a wider strategy, with the order not issued by the firm’s headquarters.

The shutdown is underway in several Chinese provinces, although it is difficult to gauge how many base stations have already been decommissioned. Where possible, these 3G-only base stations are being upgraded to support 4G technology as well. TD-SCDMA was developed as a domestic Chinese standard but was not as widely adopted as initially expected.

As a result, China Mobile has shifted its focus to 4G, with chairman Shang Bing stating that the company has “seized opportunities in the 4G sector… As the first mover in providing 4G services, we continued to lead innovative business layouts and developments and to focus our efforts on transformation and management efficiency.”

While the operator’s net profit dipped by 0.6% during 2015 to CNY108.5 billion ($16.7 billion), its revenue rose 2.6% to CNY668.3 billion. 4G growth has been strong, with the company noting that data services are now its main driver for revenue – an observation which demonstrates “changes in user habits, and will serve as the foundation for future growth and expansion”.

Data services generated CNY303.4 billion for China Mobile during 2015, up from with CNY258.5 in 2014, with mobile data traffic up 143.7% year-on-year. Meanwhile, voice revenues went in the opposite direction, down to CNY261.9 billion compared to CNY313.5 billion the previous year.

A company statement noted that “due to the downward trend in traditional voice services and SMS, our company has attached high importance to, and actively explored strategic transformation, which have now achieved some initial success.”

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