The two smaller carriers among China's big three telecom operators, China Unicom and China Telecom, announced this week that they will work together to build their 5G networks to cut costs in the face of declining revenue growth and an increasingly saturated mobile market.
The two Chinese carriers, who have fallen far behind China Mobile which owns more than 935 million mobile subscribers, will share 5G frequency bands so they can provide their subscribers with access to more 5G networks, China Unicom said in a statement this week.
In five northern Chinese cities, including Beijing, China Unicom will construct 60% of the 5G networks, leaving the remaining 40% to China Telecom, while in another 10 southern Chinese cities including Shanghai and Shenzhen, that network build-out ratio will be reversed to 40% for China Unicom and 60% for China Telecom.
Both China Unicom and China Telecom's brands and businesses will remain independent, and the two companies will uphold the principle of "maximising the benefits of joint construction to facilitate sustainable cooperation", and "will not use settlement as a means of profitability, but will adhere to fair market settlement," according to the statement.
Co-construction and co-sharing of the 5G network in China will help the two smaller Chinese carriers cut investment and operating costs, as well as reduce energy consumption, a local Chinese report said.
China is the world's largest smartphone market where the number of smartphone handsets has exceeded its population of 1.4 billion. However, smartphone sales have declined over the past few quarters due to market saturation.
The Chinese government, which in June handed out 5G licenses to the three major telecom operators, has pushed for the fast map-out of 5G network across the country as it views the next-generation network as one of the core components for showing its technological strength, particularly at the time when it is embroiled in a trade war with the United States.
While China Unicom and China Telecom have promised to invest about 8 billion yuan ($1.1 billion) and 9 billion yuan on 5G network construction this year, China Mobile announced in August that its budget for 5G network investment had been raised nearly 50% to 24 billion yuan for 2019.
Chinese government awards commercial 5G licenses to the country's three biggest telcos--China Mobile, China Telecom, and China Unicom--as well as state-owned China Broadcasting Network, just as Huawei announces it will be deploying 5G technology in Russia, with tests to start this year.
China will remain Asia's largest in terms of tech spending, growing 4 percent this year and 6 percent in 2020, and lead global markets in the 5G race where its investments in telecommunications account for 57 percent of the country's overall spend.
Huawei is also scheduled to ship its foldable 5G smartphone, the Mate X, this month.
Touting its low latency and high speeds, Ericsson says 5G can introduce a multitude of new applications for businesses and give telcos the cost efficiencies they seek, but the persistent controversy over cybersecurity--specifically involving Huawei--is leading to uncertainty and a general slowdown in the market.
The UK telco has secured nationwide licences in China that will enable it to directly contract and bill Chinese customers, marking the first time a foreign telecommunications company has been allowed to do so across the country.
Why China will surpass the world in 5G deployment speed (TechRepublic)
What Mobile Experts coined as the 'China Surge' will lead to massive 5G deployments through 2021.