China Telecom is ramping up its 4G efforts, with plans to build a hybrid TDD-FDD LTE network after China issues the 4G licenses.
China Telecom chairman and chief executive Wang Xiaochu said the company plans to spend 5 billion yuan ($816.5 million) this year to deploy LTE trial network.
Wang said most of the LTE network investment would support both TDD and FDD services in order to provide flexibility in long-term development.
“To support national technology innovation and allow flexible use of spectrum resources to meet customer demand, we plan to deploy one hybrid LTE network of integrated resources, sharing the core network with wireless access through both TDD and FDD,” Wang told a press conference for the company’s interim results on Wednesday.
Wang didn’t provide details such as the timeline and scale of the LTE trial network, but said the deployment would start from densely populated areas.
He said it is in talks with China Mobile to rent the company’s TD-LTE network, but the discussion is still in early stage and is focused on technical aspects.
“Most likely we will build our own core networks and share base stations as well. It will take a long time for [the talks to conclude]… The discussions so far are still focusing on technological aspects, and we still haven’t gotten into the business aspects,” he said.
The company may also build some of the TD networks for itself but still hopes licenses covering globally developed FDD standard will still be granted, Wang noted.
“We'll capture the opportunity to deploy an LTE trial network in a timely and appropriate manner… We will proactively participate in discussion to strive for the most favorable regulatory policies, especially on the issuance of LTE license,“ he said.
As such, China Telecom, which spent 33 billion yuan on capex in the first half, will increase its full year capex to 80 billion yuan from the planned 75 billion yuan.
This comes as the country’s smallest mobile carrier by subscribers, posted a nearly 16% rise in net profit in the first half due to strong growth in 3G subscribers and high data revenue.
Net profit hit 10.213 billion yuan ($1.67 billion) in the first six months ended in June, up 15.9% year on year, while revenue totaled 158 billion yuan, up 14.1% from a year ago. The result was in line with the average 10.12 billion forecast of four analysts polled by Thomson Reuters.
The Chinese telco lifted handset subsidies by 22% to 14.08 billion yuan, as the company stepped up marketing spending to lure more high-end 3G customers after it became the second Chinese cellco to sell Apple’s iPhone last year.
The company last year said the iPhone would help it achieve long-term sustainable growth even as it caused “short-term pressure” on profitability. The efforts appear to have paid off.
Mobile service revenues rose 28.3% to 54.6 billion yuan and accounted for 35% of the total revenues.
China Telecom added 18.3 million more 3G subscribers in the first half, bringing its total 3G subscriber number to 87.33 million. 3G subscribers accounted for 50% of the company’s mobile subscriber base of 175 million, beating rival China Mobile and China Unicom in terms of 3G penetration rate.
China Mobile, the world’s biggest wireless carrier with 740 million subscribers, has 19% of its customers on its 3G network, which is based on the home-grown TD-SCDAM technology. About 38% of Unicom’s 262 million mobile users are on its W-CDMA network.
Despite that, 3G APRU dropped to an unexpected 70 yuan, though monthly data usage of 3G handset users exceed 168MB, up 51% over the same period last year.
Meanwhile, revenues from fixed broadband services rose 5.5% to 35.2 billion yuan, as fixed broadband subscribers reached 95.82 million with a net addition of 5.7 million. Among them the number of FTTH subscribers reached 21 million.