War for China 4G deals could squeeze vendors

Dylan Bushell-Embling
telecomasia.net
Ericsson reportedly expects tough competition among vendors for 4G business in China's looming nationwide LTE rollouts, which could impact industry margins.
 
In an interview with Reuters, Ericsson head of networks Johan Wibergh said the LTE rollouts will attract fierce competition from telecom vendors, particularly domestic incumbents Huawei and ZTE.
 
Network coverage projects also tend to have lower profitability than upgrade contracts, which could further squeeze margins at an already lean time for the telecom equipment industry.
 
As a result, the large-scale LTE rollouts may not be the cure for the industry's problems that some vendors may perceive it as, Wibergh said.
 
China Unicom, China Mobile and China Telecom together plan to spend around 345 billion yuan ($56.04 billion) this year on network upgrades including 4G projects.
 
China Mobile alone has increased its 2013 capex budget by 49% year-on-year to 190.2 billion yuan, with more than half of this to be spent on commercial-ready TD-LTE rollouts.
 
While the government is yet to set an official timeline for the issue of LTE licenses, China's ICT minister has indicated that he expects allocations to happen this year

 

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