TD-LTE to Play A Greater Role in 5G

Date: 2015-10-11

TD-LTE to play a greater role in 5G
There was strong support from the government and the industry for TD-LTE, particularly for 5G which will utilize higher frequency spectrums. China Mobile is likely to be used as a test bed for the TD-LTE technology and this may impact its timeline for gaining an FDD license.

Price pressure likely to remain
On the negative side, telecom pricing pressure is likely to remain in the near term with: 1) Pressure from the government, which reiterated success in reducing tariff and that telecoms are an essential part of the internet based economy, and 2) Cheap voice offerings from MVNO鈥檚 with ZTE鈥檚 offshoot launching a RMB29/mth plan that allows 2000 minutes of domestic voice calls which is ~80% lower than the domestic operators, and 3) New MVNO entrants such as Dr. Peng which will look to bundle its fixed line products with mobile.

MVNOs mentioned that SIM resource was one factor holding them back. Snail Mobile, the first MVNO to 3m subs, complained that it had neither enough phone numbers or cities covered (with seemingly each province requiring a separate agreement). We expect MVNO regulation to become somewhat more interventionist in 2016, but expect the government will be sensitive to SOE telco earnings, keeping the MVNO business case marginal.


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