Recently, the three major operators announced the capital expenditure plan for 2019. Separately, China Mobile’s capital expenditure was about 166.9 billion yuan in 2019, which was basically the same as the same period of the previous year. China Telecom’s capital expenditure was 78 billion yuan, up 4.1% year-on-year; China Unicom’s capital expenditure was 58 billion yuan, up 29% year-on-year. . In other words, the total capital expenditure of the three companies will exceed 300 billion yuan this year.

Spending money on the cutting edge has always been a feature of operators spending money. So what are the top priorities for operators in 2019? I have observed that from the three capital expenditure structures, wireless side capital expenditures are beginning to appear fast. Growth has become the focus of investment in 2019, especially in 5G construction, and the three are expected to invest more than 30 billion yuan. Secondly, the investment in operators’ BOSS support systems/communication infrastructure has also increased significantly.

According to industry insiders, in the past few years, it was the window of 4G and 5G construction, the overall performance of the communications industry was poor, and the industry was in a downturn. However, as the three major operators clearly define 5G construction, the industrial chain will usher in a new round of development golden period.

Total capital expenditure in 2019 or over 300 billion yuan

In 2019, after three consecutive years of continuous decline in capital expenditures of the three major operators, they will rise and fall for the first time and are expected to continue to grow in the future.

Among them, China Unicom expects capital expenditure to reach 58 billion yuan in 2019, including 5G investment of 6-8 billion yuan. China Telecom’s capital expenditure this year is 78 billion yuan, an increase of 4% from last year’s actual expenditure of 74.94 billion yuan, of which about 9 billion will be used for 5G network construction, slightly higher than China Unicom’s 5G expenditure budget of 6-8 billion yuan. In 2019, China Mobile’s capital expenditure was about 166.9 billion yuan, which was basically the same as the same period of last year.

China Mobile did not disclose the specific figures of 5G investment, only said that it is expected to invest 30,000-30,000 base stations. For example, China Telecom and China Unicom accounted for more than 10% of total capital investment in this year’s 5G investment. It is expected that this year’s 5G investment will account for 10% of total capital expenditure, or about 17 billion.

In contrast, in 2018, the actual capital expenditures of the three major operators were 286.9 billion yuan, down 7% year-on-year. The capital expenditure budget for 2019 was about 302.9 billion yuan, a year-on-year increase of 5.6%. It can be seen that the bottom signal of the operator’s 4G to 5G cycle appears.

Tianfeng Securities Research Institute believes that there are two reasons for the recovery of operator capital in 2019: on the one hand, the investment cycle from 4G is lengthened, and the investment in 4G is stronger than the market expects; on the other hand, there is a 5G increase. The amount of investment budget.

Wireless into the main investment direction 5G accounted for the big head

In addition to the different capital expenditures, the three major operators have different abacus for how to spend money.

Tianfeng Securities Research Institute statistics show that China Mobile’s mobile communications accounted for the largest proportion of mobile communications in 2019, about 45.5%, up 4.5 percentage points year-on-year, mainly driven by new 5G investment; transmission network investment of 50.6 billion yuan, down year on year 8.8%, it is expected that the investment in fiber-optic broadband network will be weakened; the investment in supporting system is 17 billion yuan, a substantial increase of 103.8% compared with last year, accounting for 10.2%, an increase of 5.2 percentage points year-on-year; 100 million yuan, a year-on-year decline of 17.4 billion yuan.

For China Telecom, wireless is the biggest investment direction. 4G and 5G expenditures are 37 billion yuan, of which 5G is expected to be 9 billion yuan, up 25.1% year-on-year, accounting for 47.4%, up nearly 8 percentage points over last year. The scale of broadband and Internet investment was 18 billion yuan, down 26.4% year-on-year, and its expenditure proportion also dropped by 9.5 percentage points. In addition, the investment in information and application services was 10.5 billion yuan, up 20.9% year-on-year.

China Unicom has increased its investment in mobile networks, from 42% in 2018 to 46% in 2019, an increase of 4 percentage points. Its 5G investment is 6-8 billion yuan, and 4G investment is also expected to increase slightly; infrastructure, transmission network and other investment accounts remain basically unchanged, but the investment scale is 21.5 billion yuan, an increase of 25.7% over the same period last year. Fixed-line broadband and data business investment accounted for 17%, down 3 percentage points year-on-year, but the investment scale was up 9.8% year-on-year.

From the perspective of the capital expenditure structure of the three operators, the wireless side investment has increased significantly, mainly based on 4G and 5G. The total capital expenditure of the wireless side this year was 139.6 billion yuan, a year-on-year increase of 19%; in 2019, the three major operators A 5G investment budget has been added. The total investment of 5G is about 33 billion yuan, accounting for 10.9% of the total capital expenditure.

The author believes that the three operators’ capital expenditures in 2019 released a positive signal, the 5G construction has set sail, and the communication industry has gradually stepped out of the trough. The evolution of technology and the investment of funds have brought unprecedented new space to the communications industry. This will stimulate the confidence of the entire industry chain to move forward, and the industry chain will have more courage to face a new round of challenges.