A China Telecom Group executive said capex of $280 billion between 2020 and 2030 is “acceptable,” and he estimated the number of base stations for 5G will be two to three times that of 4G.
That’s according to a Jefferies research note, which also noted that Wei Leping, the head of Technology Committee of China Telecom Group, thinks Jefferies’ forecast of $180 billion from 2019 to 2025 is also an acceptable level for telcos. What's not acceptable: The China Academy of Information and Communications Technology forecast calling for 5G capex of $411 billion from 2020-2030, which is "way too high," according to the analysts' note.
Wei’s detailed comments, which came during an opening speech of the Global Fiber Optics Conference in Wuhan, China, were the first of its kind from a Chinese telco official, the analysts said. Wei is also deputy head of the Communications Technology Committee of the MIIT and member of the FirstExpert Committee of the National 863 Plan’s Information Technology Group.
Wei said three types of products will be first to benefit from 5G, with the main beneficiaries being fiber optics since all those base stations will require fiber connections; optical modules at 25 Gbps; and optical access components, such as CWDM/WDM lasers and filters. Considering he was speaking at an optical conference, the emphasis on optical shouldn’t be a surprise, the analysts noted.
Other industry analysts also are observing the aggressive 5G activity in China. According to The Dell’Oro Group, plans for nationwide 5G deployments coupled with spectrum proposals in the sub-6 GHz bands form the basis for its regional 5G RAN market projections, which suggests China will be the largest 5G infrastructure market by 2021.
Increased competition from Chinese vendors like Huawei continues to be a challenge for entrenched wireless infrastructure vendors.
During Nokia's third-quarter earnings conference call, CEO Rajeev Suri said that while the Finnish vendor doesn’t see any widespread worsening in competitive intensity, it does see a change in China. “The early positioning for 5G is well underway in that country, and the cost of gaining or even maintaining footprint is significant,” he said during the earnings call, according to a Seeking Alpha transcript. “We are working to address the situation with our deal discipline, as we want to ensure the right long-term footprint, but not at any cost.”
Ericsson during its conference call a week earlier said it’s trying to increase its market share in China to prepare for 5G.