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Summary

Major investments by China’s three pre-eminent telcos show how serious China is about building a national infrastructure that will allow enterprises to deploy new applications and edge services in a 5G wireless access environment.

China is fast-tracking 5G

China’s three major telecoms operators, China Mobile, China Telecom, and China Unicom, are fast-tracking 5G deployment, aiming to install the majority of their 5G base stations by the end of 2020. As per industry sources, China’s telecom carriers will spend $9.7 billion on 5G radio access networks (RAN); 85% with Huawei and ZTE, and 5% with Datang Mobile. Ericsson and Nokia get the rest, which, based on historical capex splits, IT Service Contracts Analytics (ITSCA) estimates will come 54% from China Mobile, with 26% and 21% from China Telecom and China Unicom respectively.

  • Ericsson has been awarded a 5G contract from China Mobile, including 5G RAN and 5G core (5GC). Ericsson will provide 5G core network equipment in two major regions, covering five provinces. We have estimated total contract value (TCV) at $520 million over a period of three years.

  • China Unicom has selected Ericsson 5G RAN as part of a joint nationwide 5G network being built for China Unicom, China Telecom, and China Mobile. Network services include provisioning, installation, and testing, for an estimated TCV of $238.5 million.

  • China Telecom has selected Ericsson as a 5G RAN vendor, with additional core components in a deal estimated at $211.5 million over three years.

  • China Unicom has selected Nokia to support the buildout of its standalone 5GC network in China. Nokia has been awarded an approximately 10% share of China Unicom’s 5GC network, which we estimate to be worth $55 million based on analysis of 5GC vs RAN deals.

5G will boost regional recovery

China was the first Asia Pacific country hit by the coronavirus, and with its economy slowly recovering, these 5G deployments could help in giving a push to industrial technologies such as big data, AI, and IoT. Separately, Nokia and Ericsson have been awarded 5G contracts in Taiwan, emphasizing the importance of 5G in the region. Nokia was selected by Taiwan Mobile as the sole supplier of its 5G network in a three-year framework deal worth approximately €400 ($448.7) million, providing a benchmark for other deals.

Appendix

Further reading

Omdia IT Services Contracts Analytics

IT Services Contracts: Quarterly Analysis, 1Q20, ENS002-000137 (June 2020)

Author

Anushree Agarwal, Analyst, IT Tools & Insights

[email protected]

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