China’s Ministry of Industry and Information Technology (MIIT) on 6 June granted 5G licenses for commercial use to the mainland telecom operators and the China Broadcasting network Corporation (CBN), earlier than the market expectation in the second half of this year. Before the commercial licenses, MIIT has started the 5G trails at the end of last year. The market expected the 5G services will be launched as soon as in August after the early rollout of the commercial license, but the popularity of the 5G services is limited in the short term thanks to the immature pricing and limited offer of 5G handsets. In addition, the PRC Government advocated to increase the broadband speed and lower the rates charged implying an aggressive pricing for 5G services is not recommended. On the other hand, the 5G services triggered investments in the infrastructure in advance by the telecom operators, such as tower infrastructure and network equipment. The 2019FY guidance for the aggregate 5G CAPEX by the three major carriers was RMB 300 billion; the investment amount is expected to increase amid the early rollout of the 5G commercial licenses. The infrastructure investment is therefore expected to weigh on profitability due to higher costs. On the contrary, infrastructure service providers and network equipment vendors could directly gain on the increased investment by the telecom operators and thus earning growth.

Bloomberg, MIIT

General Disclosure and Disclaimer
Frontier Capital Management Limited (“FCM”) is a subsidiary of Frontier Financial Group (“the Group”). It is regulated and licensed by Hong Kong Securities and Futures Commission, also is an Exchange Participant of The Stock Exchange of Hong Kong Limited, and a Direct Clearing Participant of Hong Kong Securities Clearing Company Limited.
The information contained in this website is for informational purposes, and does not intend to recommend, invite, offer, or confirm of any terms. Based on the sources that are believed to be reliable, FCM attempts to provide accurate, complete, and up-to-date information and analysis. However, FCM cannot represent or guarantee its accuracy, completeness, or timeliness of such source and information. Before making any decision on your investment, you should weigh the provided information carefully and bear any responsibility and risk incurred. And you should seek for advice of a professional financial advisor.
The Group, its subsidiaries and connected persons may have held some of the equity securities mentioned in this article, but the Group and FCM will place your financial interests ahead of their own.