China Unicom, the country’s second largest mobile carrier, will soon build a trial network for the Beijing-backed TD-LTE technology, said company chief executive Chang Xiaobing.
In a press briefing for its interim results yesterday in Hong Kong, Chang said Unicom will build the TD-LTE trial network in major cities and popular areas. But he didn’t provide the specific details about the scale of the trial network and the investment for the project.
The Chinese government is likely to give out 4G licenses for the operation of TD-LTE first in order to support the technology and narrow the gap between TDD and FDD, Chang said.
“Based on the information we’ve received so far, our analysis is that the government will issue 4G licenses in a similar way that 3G licenses were given out,” Chang said. “We just started this [planning for TD-LTE trial] lately, so it's too early to be specific or to tell how much the investment will be.”
When China issued 3G licenses, the MIIT gave out the license first to China Mobile to operate TD-SCDMA, in order to support the home-grown 3G technology. China Unicom and China Telecom, which adopted the widely used W-CDMA and cdma2000 technologies respectively, were given the 3G licenses nearly a year after China Mobile’s 3G launch.
The decision marks a reversal of the company’s early stance on choosing FDD technology over TDD for its future LTE network.
“The future 4G network must allow us to have a very smooth migration from [our] current 3G network, and we will be standing very firm with this direction,” Chang said back in March at a media briefing for its 2012 annual results.
Chang said the company still prefers FDD over TD-LTE.
“We, of course, want to be granted the FDD-LTE license as soon as possible…But the government [the MIIT] hasn’t disclosed any specific details about the 4G licensing,” he said, noting that everything is still in the air.
Chang did not reveal the capex for the 4G project but said outlays in the second half will be larger than in the first half.
Unicom had earlier earmarked about 80 billion yuan in total capex this year. It spent only 21.6 billion yuan in the first half, compared with 38.9 billion yuan in the same period a year earlier.
"In the second half we will invest in the trial 4G networks of FDD-LTE and TD-LTE, but the total investment will be capped under budget," Chang said.
The company posted a 55% rise year-on-year for its net profit for the first half, thanks to strong growth in 3G subscribers and increase in mobile data usage.
Net profit increased to 5.32 billion yuan ($868.7 million) for the six months ended June 30, from 3.43 billion yuan a year earlier. The latest results exceeded the average forecast of 4.89 billion yuan by four analysts polled by Thomson Reuters.
Revenue jumped 18.6% to 144.3 billion yuan. The company's 3G customer base grew 73.9% to over 100 million, while ARPU stabilized to 77.6 yuan. Mobile data usage meanwhile increased by 131.3%.
3G service revenue was up 52.1% to 40.91 billion yuan, representing a majority 56.2% of mobile service revenue.
The operator spent 4.22 billion yuan, or about 10% of its service revenue, on subsidies for 3G terminals. The proportion was down from 13% a year ago.
Trading in China Unicom's shares on the Hong Kong Stock Exchange were suspended on Thursday afternoon, because its first half results were unexpectedly posted on the State-owned Assets Supervision and Administration Commission (SASAC) before the Hong Kong market close. Unicom shares were up 2.67% to HK$11.54 prior to the suspension.
Chang apologized to investors yesterday in the press briefing and said such a mistake would not happen again.