Forecast Update China – 1H21: 5G adoption to drive mobile service revenue

China launched 5G services in 4Q19. Prior to the launch, mobile service revenue saw a decline in 2019 mainly due to intense competition among the three service providers, which led to heavy discounting of mobile data plans. 

5G adoption has benefited mobile service revenue. According to China Telecom, the mobile ARPU of its 5G subscriptions has increased by around 10% after migration from 4G technology. Meanwhile, China Unicom attributed the rebounded year-over-year (YoY) 3.2% growth of its mobile service revenue in 2H20 to the expansion of its 5G customer base. 

During April 2021, Omdia refreshed its latest subscriptions and revenue forecast for mobile and fixed broadband segments in China. For the mobile segment, our expectation is that 5G adoption will inject momentum into mobile service revenue and contribute to a positive revenue trend over the 2021–26 outlook period. In particular, Omdia deems several factors that are driving 5G momentum in China.

• The massive rollout of 5G network. According to Ministry of Industry and Information Technology (MIIT), the number of 5G base stations in China was 819,000 at the end of March 2021, with a coverage of all cities above prefecture level. It claimed that the number of 5G base stations in China accounted for more than 70% of the total 5G base stations globally over the same period.
• 5G handsets are becoming the major choice in China market. According to the China Academy of Information and Communications Technology (CAICT) between January and April 2021, 5G handsets accounted for 72.7% of total handset shipments in the country. China Mobile also predicted that 5G handsets will account for 80% of total handset shipments in China by the end of 2021.
• The declining unit price of 5G package data. due to the impact of the speed upgrade and tariff reduction policy as well as the three service providers’ promotion of 5G, in April 2021 MIIT disclosed that the unit price of 5G package data had decreased to CNY4.4 ($0.7)/GB in China, making it affordable for many.
• Chinese government is accelerating technology migration. In particular, MIIT is encouraging service providers to migrate mobile connections from 2G/3G networks to 4G/ 5G networks. In May 2020, MIIT provided guidelines on stopping new IoT connections on 2G/3G network.

Given the above, during Omdia’s April mobile forecast, we expect the number of 5G subscription to continuously grow over the 2021–26 forecast period. By the end of 2026, we expect IoT to account 56% of total mobile connections, contributing the major growth in mobile connections over the outlook period. 

Led by 5G connections growth and with the projection that the economy will gradually recover from the coronavirus going forward, during our latest mobile forecast produced in April 2021, we expect that mobile service revenues will show a positive trend over the 2021–26 forecast period.

Discover the full analysis in the Forecast Update China – 1H21 report. This report summarizes the latest China market status in 1H21 and provides Omdia's forecast for mobile and fixed broadband segments. It highlights key drivers for 5G adoption and fixed broadband growth over the 2021-26 period. This report is an example of one of the market analysis, market forecasts, and market data insights that make up the Service Provider Asia Markets Intelligence Service from Omdia. Understand the Asia market dynamics, key trends, and service provider strategies across mobile, broadband, pay TV and video services, and identify opportunities and mitigate risk with expert-led research, by downloading the overview now.