China's three major telecommunications companies announced plans to target cloud computing power and Artificial Intelligence (AI).
According to Nikkei Asia and the Yicai, China Telecom, China Mobile, and China Unicom are shifting their investment focus from 5G to cloud computing and AI. With 5G infrastructure reaching its peak, the focus on AI and cloud computing aligns with the current direction of China's government policies.
With the Chinese government proposing AI Plus, the three major telecommunications companies responded by emphasizing the empowerment of enterprises with AI. China Telecom has the LLM TeleChat, China Mobile has the Jiutian LLM, and China Unicom has the Yuanjing LLM.
Public data from the Chinese Ministry of Industry and Information Technology shows that the proportion of 5G network users in China reached 50% at the end of February 2024. The total number of 5G mobile phone users from the three major telecommunications companies plus China Broadcasting reached 850 million, accounting for nearly 50% of the overall mobile phone users.
The number of 5G base stations has reached 3.51 million. This accounts for nearly 30% of the total base stations.
China Telecom, China Mobile, and China Unicom have successively released their 2023 financial reports. China Telecom stated that its capital expenditure in 2023 was CNY98.8 billion (US$16.66 billion), a 7% increase, but did not separately specify the amount of 5G investment as in the past.
China Telecom expects its capital expenditure in 2024 to be CNY96 billion, a 3% decrease. CEO Ke Ruiwen pointed out that the decrease is mainly due to structural adjustments, and capital expenditure is expected to continue decreasing in the coming years unless new technologies such as 5G or 6G emerge.
China Mobile, which has the largest amount of users, stated that its 5G investment peaked in 2023. Chairman Yang Jie has repeatedly stated that China Mobile's 5G infrastructure was at its highest between 2020 and 2022 and its capital expenditure climaxed in 2022, but decreased by 3% in 2023 to CNY180.3 billion.
China Mobile expects its capital expenditure to decrease by 4% in 2024. However, investment in AI and cloud computing will increase by 20% to CNY47.5 billion.
China Unicom, the smallest of the three major telecommunications companies in terms of scale, also stated that investment will shift from a network communication business to a computing network with the gradual improvement of 5G network coverage. China Unicom's capital expenditure in 2023 was CNY73.9 billion, a decrease of 0.4%, and the company's expected capital expenditure in 2024 is CNY65 billion.
China Mobile pointed out that enterprise transformation faces some uncertainties. The complex and harsh external environment, along with international trade and technological barriers, will affect the supply chain and impact corporate operations.
