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The B-end market in the 5G era "war" China Mobile "elephant" turned hard

via:CnBeta     time:2019/8/12 7:01:17     readed:54

China Mobile’s semi-annual report released on August 8 showed that both the company’s revenue and net profit fell, which was the first time in its nearly 20 years of listing.

“It’s too difficult to increase revenue.” Liu Xianjian, an employee of China Mobile’s headquarters, told the reporter of “Daily Economic News”. In order to complete the performance indicators, the department where Liu Xianjian is located has recently begun to emphasize cost reduction and efficiency increase, and the assessment pressure is also increasing. Li Mingyuan, a middle-level manager of China Mobile's government, told reporters that since the third quarter of last year, the KPI assessment has become more stringent. In the past, the number of times only for the client program was changed to become the “single amount”. "If China Mobile is still the boss of the industry, then a certain node in the future may suddenly find out that this market position will be lost."

China Mobile is not without prejudging the arrival of the crisis. In the first half of this year, the company has begun to brew government business integration, and the new chairman Yang Jie has accelerated after he took office. China Mobile hopes that the B-side business can play a new profit point.

But the reality is that China Mobile still faces a large pressure of “speeding up and reducing fees”. In the second half of the year, the implementation of the port number transfer network, 5G construction investment is huge, the time period is long, the company has to go out of the quagmire of performance decline is still very difficult. And China Mobile has a long way to go before it wants to force the B-side and change the status quo that relies too much on the personal mobile market.

"Basic disk" began to shake

“A few years ago, there was an 'asymmetric regulation' between the three major operators, which did not allow China Mobile's package tariffs to be cheaper than Telecom and China Unicom.” The above-mentioned China Mobile headquarters staff told reporters that the relevant departments hope that the three companies can maintain basic competition. The situation, to prevent a single big.

From the perspective of the number of mobile users, China Mobile has even surpassed the total of China Unicom and China Telecom, reaching 935 million. The broadband service that has just been launched for more than three years has surpassed China Telecom. It should be known that China Telecom’s status as “Broadband Big Brother” has remained for more than 20 years.

But the reality is that the era of operators relying on demographic dividends has passed, and China Mobile cannot simply rely on the increase in user scale to achieve performance growth.

According to financial report data, China Mobile's operating income for the first half of the year was 389.427 billion yuan, down 0.6%, and its main business communications service revenue fell 1.3%, continuing the downward trend in the first quarter. In contrast, China Mobile’s net profit situation is even more severe. In the first half of the year, China Mobile's profit was 56.063 billion yuan, down 14.6% year-on-year. In the same period last year, China Mobile achieved a net profit of 65.641 billion yuan.

The "Daily Economic News" reporter noted that this is the first time in the past 20 years that China Mobile has listed its net profit data.

Regarding the reasons for the decline in performance, China Mobile’s vice president and chief accountant Dong Wei said at the performance communication meeting on August 8 that, on the one hand, from the perspective of income, the impact of speeding up the fee reduction, and the effect of canceling traffic roaming last year, the overall The revenue in the first half of the year was reduced by 4.7 billion yuan, which reduced profits by nearly 6%. On the other hand, the increase in rigid costs has increased the cost of depreciation by 4.2 billion yuan. Marketing expenses have also increased, sales expenses increased by 4.5%, and R&D investment in 5G vertical industry increased... All of the above factors have led to a decline in China Mobile's profits.

Despite the 5G east wind, the performance of China Mobile (00941, HK) has affected the stock price. Wind data shows that since mid-March, China Mobile's share price has been in the downward channel. On the day of the August 8 financial report, China Mobile hit a new low in the past five years. Within a few months, China Mobile's share price fell to a low of HK$62.05 per share from a period high of HK$86.04 per share. On August 9, China Mobile's latest closing price was HK$64.9 per share.

Although China Telecom and China Unicom have both fallen in the Hong Kong stock market, their mass is not the same as China Mobile. In terms of a drop of HK$20 per share and a total share capital of 20.5 billion shares, China Mobile’s market value once evaporated by HK$410 billion in just a few months, in stark contrast to the speculation of the 5G concept in the A-share market.

Telecom industry analyst Fu Liang told reporters that the major change in China Mobile's semi-annual report this year is that wireless Internet revenues have turned from positive growth to negative growth – in the first half of the year, China MobileMobile phoneInternet traffic revenue decreased by 1.5% year-on-year. The decline in voice revenue is expected, but the mobile Internet traffic revenue has increased and decreased, which has become a key factor in the decline of China Mobile's revenue. This has shaken China Mobile’s “basic disk” – the stability of the personal mobile market.

Late structure adjustment

As a middle-level employee, Li Mingyuan’s performance on China Mobile’s performance is not unexpected. As early as the third quarter of last year, China Mobile’s slowdown in revenue has been enough to cause concern. Among them, there are the impact of the speed-up and fee-reduction policy requirements, but more importantly, the result of industry incentives.

In fact, China Unicom and China Telecom have made substantial profits in the field of large traffic, which has forced China Mobile to follow up.

"There has never been a preemptive advantage in the market. It always follows the run of others and passively beats. Every time the group sets a unified tariff, it is all pressure on the following, instead of sending a weapon to restrain the enemy." Liu Xianjian Introduction, I have worked at the grassroots level, and the country has used almost the same marketing method when it has not yet vigorously advocated speeding up the fee reduction.

In the context of the overall slowdown in the personal communications service industry, China Mobile has not done diversified exploration. In fact, long ago, the company has implemented a “four-round strategy”, focusing on new businesses represented by personal business, family business, government business, and Mi Wei culture, in an attempt to diversify.

From the latest data, China Mobile still relies too heavily on personal mobile market revenue, accounting for more than 71% of communications services, while family business can still be regarded as personal market business, accounting for 7.6%. In other words, the B-side business for government and enterprises only contributed about 20% of the revenue.

This is obviously different from China Telecom and China Unicom. In 2018, China Telecom's smart application ecosystem revenue accelerated, contributing more than 50% to incremental service revenue, while IDC and cloud business revenues increased by 22.4% and 85.9%, respectively.

In Fu Liang's view, the other three rounds of China Mobile's four-wheel drive have maintained growth, but still failed to offset the decline in mobile phone voice and Internet revenue. The semi-annual data of total revenue of communication services showed negative growth for the first time. Therefore, actively promoting the optimization of income structure and cultivating new growth momentum have become the key to the future development of China Mobile.

In March of this year, Yang Jie, who had been at the helm of China Telecom for many years, was appointed to China Mobile as the chairman of China Mobile. Yang Jie put China Mobile's hopes of increasing profits on the government business. Li Mingyuan said that since the third quarter of 2018, the growth of China Mobile's personal customers and family customers has slowed down, but the income of the government and enterprise markets has continued to increase, and began to erupt in 2018, which made the Group see hope.

However, from the outside world's view, China Mobile, which has entered the government and enterprise market for many years, has been slow to move. In the past, it has not made great efforts to develop political business. In the past two years, personal business has slowed down, and China Mobile has gradually realized that the crisis has come to the side, but has not prepared for how to fight the risks.

In the semi-annual report, China Mobile officially disclosed the major restructuring of the company, and it is also the largest business adjustment and institutional reform of China Mobile in recent years. The specific adjustment is to establish a government and enterprise division based on the government and enterprise branch, establish a cloud competence center based on the Suzhou R&D center, establish a smart home operation center based on the Hangzhou R&D center, and establish a headquarters international business department. Trying to speed up the buildcloud serviceThe core competence of the family business sector will comprehensively enhance the overall planning and expansion capabilities of the government and enterprise market and the international market.

Carrier's B-side battle

In 2015, when bidding for a city-level project failed, Li Mingyuan still remembered it deeply. Finally, this “Heavenly-level” project was won by China Unicom. Li Mingyuan said that in the past, China Mobile’s political and corporate affairs coordination was difficult, and the process of reporting to customers may be one day later than the competition.

"China Mobile has become a small ecological circle. While people work in it, their concerns about external life are reduced." Li Mingyuan believes that the ease of the city-level employees is also reducing the combat effectiveness of China Mobile.

Fortunately, the recent poor performance has driven China Mobile to make changes. "Daily Economic News" recently reported on China Mobile's corporate business line adjustment - after the change, China Mobile's government and enterprise branch two "brands", the internal performance of the government and enterprise division, the external government and enterprise branch . This helps to rationalize the relationship between government and enterprise branches, provincial companies, and industrial research institutes, emphasizing headquarters management functions and centralized operations.

Liu Yonghua, a management of China Mobile's government and enterprise branch, told the reporter of "Daily Economic News" that China Mobile's previous senior management thinking emphasizes professional operations and transforms the functional departments of relevant headquarters into professional companies. “Independent companies will operate faster, but each will be a battalion. Group-level government companies will not be able to co-ordinate better development.”

From the perspective of the industry, China Unicom and China Telecom have their own government and enterprise departments, and have all raised to the level of the group headquarters. The "Daily Economic News" reporter noted that the B-side battle of operators has already started, and China Telecom has ranked third in the public cloud service market.

In Li Mingyuan's view, China Telecom has been immersed in the government and enterprise market for a long time, making its adjustment on the income side faster. In November last year, China Unicom announced the establishment of an industrial Internet product center, focusing on key vertical industries and innovation areas, and more aimed at the prospects of enterprise-level services.

Cooperation with BAT and other partners has made China Unicom more flexible in the field of government and enterprise. As early as October 2017, China Unicom announced that it would open up cloud computing resources with Tencent and Alibaba, and carry out in-depth cooperation at the cloud business level.

In fact, it is far more than three major operators to look at the government and enterprise To B market. The radio and television system company has already placed high-level political affairs in the company, let alone Internet companies such as BAT. Few people have noticed that in order to strengthen China Mobile's competitiveness in cloud business, UCloud, a domestic cloud service company, announced that it has obtained China Mobile E round investment in the middle of last year. However, in the field of cloud services, China Mobile's performance is still not satisfactory.

The "Daily Economic News" reporter noted that China Mobile's current business adjustments have placed more emphasis on the productization and market capabilities of the Industrial Research Institute, and some of its production functions have been assigned to the Industrial Research Institute. "Especially Suzhou Research Institute and Shanghai, Chengdu, Xiong'an Industrial Research Institute, has always been positioned to do research only, regardless of productization, 'management no matter.' The development of things out, you love to use. Now ask They must integrate R&D operations and add operations." Liu Yonghua revealed.

However, it is difficult to do business and other B-side business, and whether China Mobile can smoothly transform is still unknown. Liu Yonghua has worked in the government and enterprise market for many years. In his view, the market for government and enterprise is huge, but the characteristics of each field are different. Each industry and every company always has its own specific needs. It takes time to break into the B-end market and gain an in-depth understanding of the industry. This is completely different from a standardized personal business.

3G to 5G ups and downs

In 2010, Li Mingyuan switched from China Telecom to China Mobile. At that time, the number of users of China Mobile was 500 million, which is about half of the current. In Li Mingyuan’s view, China Mobile did not launch the ring in the 3G and 4G eras.DangdangThe new brand, Global Pass, Shenzhouxing, M-Zone, etc. are all old things ten years ago, and China Mobile needs brand reshaping.

When Li Mingyuan joined China Mobile, he was in the 3G era. China Mobile is developing its own TD-SCDMA technology with independent intellectual property rights and has suffered from TD-SCDMA.

In fact, at that time, the utilization rate of TD-SCDMA was not enough, and subsidizing 3G terminal China Mobile also cost a lot of money. In the 3G era, Qualcomm is reluctant to produce TD-SCDMA chips.appleMobile phones do not support China Mobile's network, and China Mobile has lost many users. From 2009 to 2013, in the face of the fierce attack of China Unicom and China Telecom, China Mobile in the 3G era even appeared to have no chance to fight back.

On December 4, 2013, the Ministry of Industry and Information Technology issued TD-LTE 4G licenses to all three major operators. China Mobile invested all of its enthusiasm in the construction of 4G, trying to make up for the shortcomings of the 3G era as soon as possible. In the whole year of 2014, China Mobile has developed nearly 100 million 4G users; in 2015, China Mobile's 4G users exceeded 300 million; to date, China Mobile's 4G subscribers have exceeded 700 million.

The current 5G construction is in full swing, and China Mobile is not allowed to hesitate in the competition. "Daily Economic News" reporter noted that Yang Jie made clear in the semi-annual report of the previous few days that this year, China Mobile plans to invest 24 billion yuan in 5G, building more than 50,000 5G base stations during the year, slightly higher than the outside world. expected. However, the huge cost of 5G investment has also caused the outside world to worry about the performance of China Mobile.

Yang Jie revealed that the next three years will be the peak period of China Mobile's 5G investment, but the annual total capital expenditure will not fluctuate significantly. In addition, Yang Jie said that in terms of 5G development, China Mobile does have contact and discussion with China Radio and Television, and seeks to build a cooperation model of “building and sharing”.

In the industry's view, China Mobile seems to be waiting for the maturity of the SA (a 5G networking) industry chain early next year, and then to carry out large-scale 5G base station construction. The 5G SA network can support the application in the vertical industry and is conducive to the development of 5G government business.

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