(June 6): China approved four operating licenses for 5G networks, setting the stage for the super-fast telecommunications system amid simmering tensions with the US over technology and trade.
The country’s three state-owned wireless carriers and China Broadcasting Network Corp. were granted licences for full commercial deployment, the Ministry of Industry and Information Technology said Thursday.
The operators, China Mobile, China Telecom Corp. and China Unicom Hong Kong, have been testing the technology in several cities including Beijing and Shenzhen.
Full deployment of 5G networks in a country with almost 1.6 billion wireless phone subscriptions is expected to boost local companies making gear for applications in autonomous driving, robotics, remote surveillance and virtual reality. The faster-than-expected approvals also come as Shenzhen-based Huawei Technologies Co., the world’s largest manufacturer of networking equipment, has vowed to maintain its lead in the face of a US campaign pressuring allies not to use the company’s products.
The battle over 5G network suppliers is part of what China sees as a broader push by the Trump administration to check the Asian country’s rise as a technology powerhouse. Along with the boycott of Huawei products, the Trump administration has effectively blocked US companies from supplying Huawei with critical chips and software used in its components.
The Chinese government’s accelerating 5G licensing is probably aimed at ensuring carriers do not weaken plans to build as many as 110,000 5G base stations, assuming Huawei can deliver the necessary equipment using component inventories, wrote Edison Lee and Timothy Chau, analysts at Jefferies, in a June 5 note to clients.
“Huawei will fully support Chinese carriers’ 5G products in China,” the company said in a statement following the license announcement Thursday.
China continues to welcome foreign enterprises to its 5G market, Minister of Industry and Information Technology Miao Wei said Thursday, after the licences were announced.
Shares of some 5G-related companies fell in Hong Kong and Shanghai trading after the license announcement, trimming gains made earlier in the week on expectations the companies would benefit from the push for the new networks.
China Tower Corp, the three major carriers’ infrastructure provider, fell 4% in afternoon trading in Hong Kong, paring its advance in the past four days to 8.5%. ZTE Corp, which makes handsets and telecom gear, dropped 4.5%, trimming its four-day rally to 6.8%.
Betting on the fate of the nation’s next generation of telecom networks has been one of the year’s hottest trades in China and Hong Kong. An index of telecom-related shares is up 19% this year, led by a 52% rally in ZTE’s Shenzhen-traded stock.
