17 September 2019

Phone makers hear merry ringtone as 4G era dawns

For mobile carriers, providing affordable quality cellphones for the rollout of 4G services in China is just as important as building a strong 4G network.

China Mobile (00941.HK) vice president Li Zhengmao {李正茂} announced the company plans to unveil 4G devices priced at below 1,000 yuan (US$164) by 2014, which are likely to become the mainstream model.

Following the awarding of 4G licenses on Wednesday, equipment makers and handset suppliers are tipped to be big winners.

Most Chinese handset makers are optimistic about the 4G era, and that’s partly because mobile carriers are said to be subsidizing their efforts to develop 4G phones.

Liu Lirong, founder of Shenzhen-based handset maker Gionee Communication Equipment, told media he expected the country’s three mobile giants to provide nearly 100 billion yuan to subsidize the 4G handset market.

In fact, mobile carriers have become the mainstream distribution channels for handsets in recent years. During the 3G era, the mobile operators accounted for more than 50 percent of China’s handset sales, and market watchers expect the figure to hit over 80 percent in two years, according to mainland media reports.

China Mobile said earlier it plans to procure 40 million TD-LTE handset devices next year. Unlike its 3G handsets, which don’t work on other popular formats like WCDMA and thus are not too popular among consumers, the mobile giant’s 4G handset offerings will be more compatible with other systems, thus eliminating roaming difficulties.

Local phone brands like ZTE, Huawei, Coolpad and Hisense have been on the latest procurement lists, quoted insiders as saying.

Shares of these manufacturers have beaten the broader market this year. Hisense Kelon Electrical Holdings (00921.HK) has the best performance, surging over 200 percent year to date. China Wireless Technologies (02369.HK), the parent of Coolpad, jumped 23 percent while ZTE was up 30 percent. By comparison, Hong Kong’s benchmark Hang Seng Index has gained about 8 percent during the period.

– Contact the writer at [email protected]