A new study indicates progress in China’s 5G internet connectivity when combined with cloud, will create growth opportunities for Chinese service providers. According to Omdia research, China is on track to add over 600,000 5G base stations and reach 2.9 million by the end of this year. Currently, China installed some 2.38 million 5G base stations over four years leading up to February, according to government figures.
The report stated China reached a key milestone last month as the country’s four major mobile operators –China Mobile, China Telecom, China Unicom and China Broadnet- announced a roaming service trial of a 5G co-sharing network. Touted as the first of its kind in the world, the service enables users to access other telecom operators’ 5G networks and continue using 5G services when they’re outside the range of their original operators’ 5G network.
The collaboration comes amid rising restricted access from the West regarding Chinese tech companies such as Huawei, which secured 52% of China Mobile’s 5G base station work this year. The EU is reportedly considering a mandatory ban by the end of 2024 on high-risk vendors considered as posing a security risk in their 5G networks. Up until now, the bloc has set out guidance that falls short of a ban, ranging from certification requirements to diversification of suppliers, after a unanimous agreement among member states in 2020.
Despite geopolitical risks, the report pointed out China’s cloud services is a growing business. Competition will intensify for Chinese service providers that could signal price reductions in the sector. This is mainly due to higher digital transformation demand from state-owned enterprises, fueled by recent advances in AI-powered large language models.
Political risks still continue to loom over cloud services operated by private firms stemming from sweeping Beijing crackdown on Chinese tech firms. Last month, Alibaba shook analysts with its announcement to fully spin out of the US$ 12 billion cloud business, further deepening speculations of government scrutiny of privately owned repositories of sensitive and valuable data.