China Telecom: 5G capital expenditure to taper off in 2022

In March, China Telecom, one of the biggest telecommunication companies in China, announced its plans to cut this year’s capital expenditure on 5G infrastructure by 10.5 percent year on year. The company’s total budget has increased by 7.3 percent. However, hinting at the company’s will to invest more in other industrial sectors, such as its messaging service.

China Telecom
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Explosive Growth of 5G in China

China Telecom budgeted 34 billion yuan ($5.3 billion) to invest in 5G infrastructure this year, while it had reserved 38 billion yuan for 2021. The company had doubled its 5G CAPEX last year with a plan to install a total of 700,000 5G sites to expand the network’s coverage across the country. The number of 5G stations currently in use may reach 1 million sites by the end of this year.

Chinese telecommunication carriers built many 5G base stations last year in preparation for Beijing 2022 Winter Olympics. Together with China Mobile and China Unicom, the country’s other telecommunication giants, China Telecom built nearly 1.4 million sites in 2021, which was double the number of the stations built in 2020. 

Reports said that the number of registered 5G users in China was also approximately 500 million in December 2021. China Telecom also added over 180 million 5G users to their service last year. 

With the biggest 5G infrastructure in the world, the Chinese government rolled out a five-year plan to digitalise the country’s industries by using the network and its relevant technologies in 2021. The government said that it will plan ways to “strategically utilise” the network while continuing to boost its coverage.

4G Still Stands Strong?

Despite such growth, some Chinese users are choosing 4G over 5G networks due to more expensive plans. The cheapest option for a 5G subscription plan was $18 in 2019. But some people find it too expensive compared to mobile plans available on 4G.

The limited coverage was suggested as another problem, too. 5G mobile phones can still lose their internet connections if the users are in suburbs or the countryside where the mobile infrastructure is not yet established.

“People buy 5G devices at a higher price than 4G phones, but they turn off the 5G network when they are using those devices due to the poor connection,” an official of a Chinese telecommunication company was quoted as saying by Dong-a Ilbo.

China Telecom: Exploring Ways to Use 5G

China Telecom plans to find ways to not only boost the network’s coverage. As well as to utilise 5G in other industrial sectors this year, to overcome such shortcomings.

One way of utilising 5G is the company’s rich communication suite, its messaging service based on the 5G network. 

In their press release earlier this year, China Telecom said that RCS is a service that allows users to send longer text messages. They can also, talk in group chatrooms, see whether or not the recipient read their messages, send presents, and transfer large-sized files. Sinolink Securities, a capital market company, predicted that the RCS market will quickly grow in China with the help of emerging technologies. For example, artificial intelligence and big data.

The company also jointly worked with Huawei to launch 5G OpenLab in 2021. They built “innovative business solutions” in cloud-network capabilities. Liu Guiqing, Deputy General Manager of China Telecom, said that the companies are working together to make an “international standard of cloud network”, “system platforms”, and “business solutions” using 5G, at MWC Barcelona this year.

Sunny Um is a Seoul-based journalist working with 4i Magazine. She writes and talks about policies, business updates, and social issues around the Korean tech industry. She is best known for in-depth explanations of local issues for readers who need a better understanding of the Korean context. Sunny’s works appeared in prominent Korean news outlets, such as the Korea Times and Wired Korea. She currently makes regular writing contributions to newsrooms worldwide, such as Maritime Fairtrade, a non-profit media organization based in Singapore. She also works as a content strategist at 1021 Creative. A person who holds a Master’s degree in Political Economy from King’s College London, she loves to follow up on news of Korean politics and economy when she’s not writing.