China Mobile maintains guidance of building 200,000 LTE base stations in FY13, 20.8% of which will be based on the 2.3GHz E-band spectrum for indoor coverage. The base stations number split between software upgrade (F-band spectrum) and new towers (mainly on D-band spectrum) will partly depend on the equipment price. LTE equipment tender will be completed by August.
Management expects commercial TD-LTE smartphone will be launched by end of 2013, but mainly high-end models. TD-LTE smartphone priced around Rmb1,000 could be available by end of 2014, based on current feedback from chipset and handset vendors.
The FY14 capex plan on TD-SCDMA and TD-LTE will be subject to the maturity of TD-LTE value chain and market demand. CM will likely continue to have scale investment in TD-SCDMA to offload traffic before TD-LTE becomes mature. CM has a rough plan of building c.500k TD-LTE base stations in 2-3 years.
China mobile 3G users growth (50m net adds in 1H) was major driver for mobile data revenue growth. 3G ARPU was Rmb77 in 1H (overall ARPU was Rmb66), up 3% yoy. CM sold 66m 3G handsets in 1H, over 90% were smartphone. Slowed tariff decline was also a factor for good revenue growth.