China Mobile's TD-LTE Technology Expanding Fast, Where To Invest
January 28, 2013 | 7 comments | about: CHL, includes: AAPL, ALU, MRVL, NOK, QCOM, S, SI
Disclosure: I am long S. (More...)
China Mobile Ltd. (CHL), ranking as the largest mobile carrier in the world with over 722 million subscribers, had spent two years laying the groundwork for implementing TD-LTE, a 4G mobile phone standard developed by China Mobile for nationwide use. On January 23, 2013, China Mobile had revealed the company's 2013 TD-LTE terminal development strategy. "We plan to adopt multi-mode, multi-band terminals, with basic terminals supporting 5 modes and 10 spectrum bands, and ideally supporting 5 modes and 12 bands. By 2014, we will require that terminals support Band 41," explained Wang Hengjiang, director of the products division of China Mobile Terminal. China's Ministry of Industry and Information Technology, MIIT, had recently allocated Band 41 (2500MHz - 2690MHz) for TD-LTE usage.
Schedule for TD-LTE Products and Handsets
For TD-LTE products, China Mobile will develop its customer-premises equipment and data card offering through a focus on Mi-Fi mobile hotspots. China Mobile will begin "friendly user" trials of LTE Mi-Fi and other related products in the first half of 2013. Mi-Fi trial products will be distributed in Q1 2013, and the service is expected to mature enough in Q2 2013 to begin commercial trial preparations. For TD-LTE mobile handset products, China Mobile will launch "friendly user" LTE handset trials in the second half of 2013. TD-LTE handsets will be distributed in Q3 2013, and a commercial trial will be prepared in Q4 2013.
Testing Trial and Dual Path Technology
China Mobile is crucial to the success of rolling out TD-LTE networks and has been testing TD-LTE based networks while running trials on over 20,000 base stations across ten major cities, which is set to expand to 100 cities through 2013, covering up to 35 percent of the population using 200,000 base stations. In order to encourage the take up of dual-mode, multi-band devices around the world, China Mobile is employing dual path technology strategy and will not stick exclusively to TD-LTE but will operate a FDD-LTE network at the same time. According to Digitimes, the operator set up a dual TD/FDD network in Hong Kong in December 2012 using frequency bands of 2330-2360MHz for TD-LTE, with 2555-2570MHz and 2675-2690MHz used for FDD-LTE operation.
Low-Cost TD-LTE Smartphones and iPhone 6
China Mobile will announce a low cost TD-LTE smartphone in 2015 while the company is working on a global roaming plan for smartphones with TD-LTE and FDD-LTE support. The company expects TD-LTE coverage to reach 30%-35% on the Chinese mainland in 2013. Apple Inc. (AAPL) is rumored to be working on a new iPhone 6 that will work China Mobile. Despite a different 4G network standard, it will not be difficult for Apple to create an iPhone that works with China Mobile as Apple had made the iPhone for Verizon in the past and updated iPads and iPhone5 devices can work with a wider band-range of 4G for European service providers. Getting a deal with China Mobile will help Apple increase its market share in China as well as its global sales figures. However, China Mobile and Apple have been talking for several years and no official plan has materialized yet.
Who Will Benefit From TD-LTE Expansion?
In 2013, more global expansion of TD-LTE networks will take the stage as China Mobile, Airtel, Softbank and Sprint Nextel (S) /Clearwire (CLWR) with over one billion existing mobile subscribers are pushing the developments. China Mobile was set to complete its next phase of TD-LTE trial device decisions and Qualcomm (QCOM) chips are projected to support a majority of these data cards, mobile hot spot devices and customer premises equipment. China Mobile is getting cozy with QCOM, which has SoC that support all radios, including five modes (GSM, TD-SCDMA, UMTS, FD-LTE and TD-LTE) along with 10 to 12 bands.
Marvell Technology Group, Ltd (MRVL) will also get involved by supporting LTE FDD and TDD Cat 4, HSPA+, TD-SCDMA and EDGE with its PXA1801 LTE world modem. For the first wave of devices, simple TD-LTE access devices such as data cards, mobile hot spot devices and CPEs, which support existing 3G technologies, will be tested. For the second wave, more complicated devices will follow, including smartphone and tables. Anite, a mobile device testing solutions provider, announced the validation of the first GCF, Global Certification Forum, TD-LTE/TD-SCDMA Inter-RAT (Inter-Radio Access Technology) test cases. The TD-LTE/TD-SCDMA Inter-RAT conformance test cases enable chipset manufacturers and handset vendors to develop and certify dual-mode TD-LTE/TD-SCDMA devices. The availability of these test cases is key to accelerating the launch of dual technology handsets in China.
When it comes to network deployment, Nokia Siemens Networks, NSN, 50:50 JV between Nokia Corporation (NOK) and Siemens (SI) comes to mind. NSN will continue to benefit from the 3G to 4G wireless in the coming years. NSN has nearly 70 LTE contracts globally and is the current TD-LTE market leader with five out of a total of 11 commercially deployed TD-LTE networks using NSN's gear. China Mobile and Bharti Airtel have chosen NSN to deploy their respective LTE networks. While NSN contributes around 35% of Nokia's fair value, Nokia is positioned to gain from TD-LTE expansion. Alcatel-Lucent (ALU) was another selected vendor as Alcatel-Lucent Shanghai Bell was chosen to provide approximately 3,000 base stations in the cities of Shanghai, Nanjing and Qingdao, three major economic hubs of China
TD-LTE is expanding fast in 2013 and is expected to boom in 2014 and 2015 as China Mobile may obtain the first 4G license from MIIT sooner than expected. Investors still have time to research and develop a sound investment plan for the long-term.
Note: All prices are quoted from the closing of January 25, 2013. Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.
Additional disclosure: may initiate a position in QCOM and CHL over the next 72 hours.