德银-中国-电信通讯行业-移动用户调查显示，CT应该占据更多的市场份额-2019.10.22-30页_2mb

Industry Update: Chinese Telecoms and Number Portability (MNP)

Core Content

This document provides an analysis of the Chinese telecommunications industry, focusing on the impact of Number Portability (MNP), a policy allowing mobile users to switch operators while keeping their phone numbers. It highlights user behavior, market share changes, and financial forecasts for major telecom operators: China Telecom (CT), China Mobile (CM), and China Unicom (CU).

Main Points

User Behavior and MNP Impact

• Switching Interest: 88% of users are interested in switching operators if MNP becomes nationwide, significantly higher than the 55% from a three-year-old survey.
• SIM Consolidation: 20% of users have multiple SIM cards, and 62% are considering consolidating them, potentially affecting 150 million subscriptions.
• Preferred Operator for Switching: China Telecom is the most preferred operator for switching, followed by China Mobile and China Unicom.
• Reasons for Switching: Network quality is the top factor for users considering a switch, while price is the main concern for those keeping multiple SIMs.

Market Share Shifts

• China Telecom: Gains significant market share, increasing from 42% in 2016 to an estimated 43% by 2022.
• China Mobile: Faces a potential loss of 10.5% market share due to MNP, with CM losing users to CT and CU.
• China Unicom: Gains slightly due to its lower prices, though the impact is less than CT.

Financial Impact

• Earnings and Margins: CT is expected to see improved earnings due to lower promotional spending and higher revenues, while CM may experience margin compression.
• Churn Impact: With 1% monthly churn, CT could gain 4.6% market share in the third year, while CM could lose 15.4%.
• ARPU Trends: Users are willing to pay 17% more for 5G, suggesting pent-up demand and potential revenue growth.

Forecast Adjustments

• Market Growth Assumptions: The forecast assumes no market growth in the first year, 3% in the third year.
• Subscribers Growth: CT is expected to increase its mobile subscribers by 22% over the next two years, while CM and CU show more modest growth.
• ARPU Changes: CT's ARPU is expected to decrease slightly, while CM and CU show varied trends.
• Cost Adjustments: CT has higher selling expenses but may benefit from lower costs and higher revenues post-MNP.

Key Information

MNP Impact on Market Share

• CT: Expected to gain 4.6% market share in Year 3 with 1% churn, while CM could lose 15.4%.
• CM: Likely to become more aggressive in promotions to retain users.
• CU: Benefits from price sensitivity, but faces competition from CBN.

Financial Metrics

Forecast Changes

• Mobile Net Adds: CT is expected to grow by 22% over two years, adding 2.2% market share.
• ARPU Growth: CM's ARPU is expected to drop slightly, while CT and CU may see marginal improvements.
• Selling Expenses: CT's selling expenses are higher (15.4%), but CM and CU may see a slight decline.
• Network Costs: CM's network costs are the highest (28.2%), while CT's are slightly lower (28.4%).

Key Takeaways from Consumer Survey

• Customer Loyalty: CT has the highest customer loyalty, while CU has the lowest.
• Network Quality: CT is perceived as having the best network and service quality.
• Pricing Sensitivity: CM and CT users care more about network quality, while CU users are more price-sensitive.
• 5G Readiness: 85% of users are willing to pay more for 5G, with an average of 17% more than current plans.

Summary

The introduction of MNP is expected to cause significant churn in the Chinese telecom market, with CT gaining the most market share due to its improved network perception and user loyalty. CM, despite being the market leader, may face margin compression and aggressive promotions to retain users. CU benefits from price sensitivity but could see competition from CBN. The survey highlights a strong consumer interest in 5G, with users willing to pay more, indicating potential for revenue growth. CT is the top recommendation due to its position to benefit from lower costs and higher revenues.