Ericsson, Alca-Lu expected to benefit as China issues TD-LTE licences

China has finally issued TD-LTE licences to the country's three mobile operators in a move that will reinforce the position of European equipment manufacturers as well as local Chinese vendors that have won lucrative deals to help build next-generation networks there.

China's Ministry of Industry and Information Technology (MIIT) confirmed on its website that it has issued TD-LTE operating licences to China Mobile, China Unicom and China Telecom, paving the way for China Mobile to be the first to launch its LTE network based on TD-LTE technology on Dec. 18 as planned.

However, the MIIT made no mention of licences for the FDD-LTE variant. These licences are expected to be issued in the second half of next year, according to a research note from  Jefferies analysts Cynthia Meng, Clara Fan and Nick Wang. China Unicom and China Telecom have both committed to deploying FDD-LTE networks.

China Mobile is planning to build more than 200,000 TD-LTE base stations across the country. As reported by Bloomberg, the network was scheduled to reach 100 cities covering a population of 500 million people this year to make it the world's largest network based on LTE technology.

European network vendors are already helping China Mobile to build its TD-LTE network: in September the operator confirmed its selection of vendors for its first TD-LTE contracts, which are believed to be worth around 20 billion yuan ($3.28 billion, or €2.41 billion).

The Chinese mobile giant said it had selected nine vendors, including Ericsson, Nokia Solutions and Networks (NSN), and Alcatel-Lucent (through Shanghai Bell Alcatel-Lucent), along with six domestic vendors, including Huawei, ZTE, Datang Mobile, Wuhan-based FiberHome Technologies, Potevio and New Postcom Equipment Company.

Ericsson and Alcatel-Lucent have since confirmed that they each won an 11 per cent share of the deal.

According to Jefferies, it is maintaining its LTE capital expenditures estimate in China for 2014 at €12.14 billion, with China Mobile accounting for the majority of this in the first half of the year. TD-LTE accounts for 30 per cent and 20 per cent of China Telecom's and China Unicom's recent LTE equipment bidding, respectively, Jefferies added.

The launch of LTE services in China is also set to benefit handset manufacturers such as Apple; both China Unicom and China Telecom currently carry the iPhone, and China Mobile is also  reportedly close to agreeing a distribution deal with Apple on an iPhone that would work on both its 3G and TD-LTE networks.

Jefferies said it estimates 55 million LTE handsets will be sold in China in 2014 (40 million TD-LTE and 15 million FDD-LTE handsets). Analysts there added that China Mobile already has 16 TD-LTE handset models, and said TD-LTE-enabled iPhone 5s and 5c models may be introduced in the near future.

Meanwhile, the MIIT also awarded China Mobile a licence to operate fixed-line broadband services, according to a statement by the company. Previously, only China Unicom and China Telecom were able to offer fixed-line broadband.

For more:
- see this Bloomberg article
- see this Reuters article
- see this Xinhua article

Related Articles:
China Mobile confirms TD-LTE suppliers, as iPhone goes live
Report: Huawei, ZTE win 50% of China Mobile TD-LTE contract
European Commission denies link between probe delay and Chinese TD-LTE tender
Europe's vendors jostle for slice of massive China TD-LTE tender
The timing of the EU's warning to China is a worry for Europe's vendors