Two of China's major carriers team up for 5G network build-out

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.

See also: How China, Brexit, and the US derailed global 5G wireless

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.

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