China will see rapid expansion of LTE in the second half of this year, with China Mobile (CM), China Telecom (CT) and China Unicom (CU) deploying 530,000, 134,000 and 40,000 LTE base stations, respectively, according to Goldman Sachs.
“We believe that CM is at least two years ahead of CT and CU in LTE roll out,” Goldman Sachs analyst Donald Wu wrote. “We believe CT is likely to be the first FDD-LTE service provider in China as it has indicated it plans to increase capex if it receives an FDD-LTE license.”
China Unicom is still focusing on 3G, but may deploy FDD-LTE if it receives the license and can raise the capital. China does not lack for a supply of TD-LTE smartphones with 128 models. China Mobile plans to market a low-cost $100 TD-LTE smart phone, according to Goldman Sachs, increasing market penetration and demand for towers.
“We believe a low-cost LTE smartphone should accelerate the LTE adoption in 2H14,” Lu wrote. “We estimate CM’s LTE subs to reach 60 million in 2014 and 168 million in 2015, or 7 percent and 19 percent of its total subs, respectively.”
The launch of LTE by China Mobile will give a big boost to the global LTE ecosystem, both on the device side and the infrastructure side, according to Peggy Johnson, Qualcomm, who spoke at the Wireless Infrastructure Show last week in Orlando, Florida.
“Around the world, we now have 279 LTE systems launched in more than 100 countries, and 32 operators are launching or have launched TDD. LTE has experienced 124 percent growth year over year growth,” Johnson said.
Digital Bridge Invests in the Middle Kingdom
With a minority investment in an independent Chinese tower company, Digital Bridge Holdings is looking to take part in this market, which currently has under a million towers today and is set to grow to 1.9 million in five years.
“It is a really dynamic market. The numbers are staggering,” Marc Ganzi told AGL Media Group. “It is difficult to ignore the market. You only have to believe 10 percent of that growth story to get excited.”
Ganzi plans to grow the business, but he understands nothing happens easily in China, where the networks are dominated by the government. But the government supports shared wireless infrastructure.
“There is a law that mandates collocation on one of every three towers,” he said. “It is the only country in the world that has collocation by law…that’s even better than collocation by right! You don’t collocate, you go to jail!”
Ganzi has high hopes for the management team of the tower company, which was born in China but educated in the United States.
“It is a small investment for us, but these guys are young and super energized,” he said. “I have been working with the management on best practices, build multi-carrier structures, back office and collocation sales. Who knows where China will take us?”