China Unicom Hong Kong Limited
) has finally launched 4G service- the third major telecom player
to launch the super-fast wireless network. However, skepticism
remains about the permanent adaptability of the LTE standard,
which would be selected by the carrier for its 4G service.
China Unicom has launched the 4G service in 25 cities
including the likes of Beijing, Shanghai and Guangzhou. The
company plans to cover 300 cities by the end of this year. The 4G
plan is priced at a monthly rate of RMB 76 ($12.36), much
reasonable than rival
China Mobile Ltd
) start-up scheme of RMB 88 ($14.31).
Beijing-based China Unicom also launched 61 terminal devices,
which include branded mobile phones, smartphones, tablets and
data cards. More than one-third of these terminals are capable of
supporting 4G network. China Unicom targets total terminal sales
of around 188 million in 2014, of which 100 million will be 4G
In Dec 2013, China Unicom won LTE-TDD (Time Division Duplex)
license along with China Mobile and
China Telecom Corporation Ltd
). Nevertheless, China Unicom intends to adopt the globally
accepted FDD (Frequency Division Duplex) technology when the
government issues licenses for the spectrum.
Despite the 4G service launch, China Unicom is not discarding
its 3G service. On the contrary, 3G remains its primary focus
while 4G forms a supplementary revenue source. The company had
126 million 3G customers at the end of Jan 2014.
At the end of 2013, China Unicom issued a tender for 50,000
LTE base stations in a bid to offer 4G services in China.
However, the company lags both China Mobile and China Telecom in
base station deployment. Additionally, China Mobile plans to
spend approximately RMB 41 billion ($6.9 billion) to deploy 4G
services in 2014, which is considerably higher than China
Unicom's target investment of RMB 10 billion ($1.65 billion).
Though initially expensive, we believe 4G will provide a
significant opportunity for China Unicom as this sector is
under-penetrated in the nation. However, with China Mobile's
strong presence in the 4G market, China Unicom needs to ramp up
its infrastructural investments to gain a meaningful market
share, in our view.
China Unicom currently carries a Zacks Rank #4 (Sell). Another
stock worth considering within this sector is
Shenandoah Telecommunications Co.
), which carries a Zacks Rank #1 (Strong Buy).
CHINA TELCM-ADR (CHA): Free Stock Analysis
CHINA MOBLE-ADR (CHL): Free Stock Analysis
CHINA UNICOM (CHU): Free Stock Analysis
SHENANDOAH TELE (SHEN): Free Stock Analysis
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