Research firm IHS iSuppli predicts that 4G LTE (Long Term Evolution) will propel the next phase of growth in the Chinese telecom space on account of which China Mobile Limited (CHL - Free Report) will have a significant lead over its rivals based on its early efforts to deploy TD (Time Division) LTE network in the country.
The news comes on the back of the country’s ambitious goal of adding 100 million 3G customers in 2013, which depicts the growth potential of the Chinese telecom market.
The research firm expects 4G customer bases to surge from an expected 1 million in 2013 to 439.9 million in 2017 with China Mobile boasting the biggest share of 52%, followed by ChinaUnicom Limited (CHU - Free Report) with 26% and China Telecom Corp. (CHA - Free Report) with the remaining 22%.
China Mobile’s biggest flaw is that it offers 3G mobile service based on Time Division-Synchronous Code Division Multiple Access (TD-SCDMA) technology, which is not very well supported by the handset makers including Apple Inc.’s (AAPL - Free Report) iPhone.
China Mobile, which covers more than half of the Chinese mobile market, has so far been successful in penetrating only 13% of its huge subscriber base with 3G customers, while China Unicom and China Telecom have 33% and 44% of 3G customer concentration respectively.
In an attempt to tide over this difficult situation, China Mobile started early to develop its much accepted TD-LTE technology and has set a target of deploying 200,000 base stations by 2013. According to IHS, the base station count will increase to 600,000 by 2017 while China Telecom and China Unicom lag behind with 400,000 and 300,000 stations respectively.
IHS anticipates 4G growth to pick up pace gradually with the maximum growth coming in 2016 and 2017 as 3G is expected to be phased out by then. With more than a billion plus cell phone users, China Mobile offers a huge smartphone market, which is still being dominated by Android and iOS.
China Mobile has been in talks with Apple for quite some time to offer iPhone through its network. Availability of the latest version of iPhone from its stable is only expected to add to the company’s impressive 4G story. We believe that with a billion plus population, a steady per capita income and increased choice of LTE supported devices the expected 4G performance is quite achievable.