Shows the danger of underinvesting when competitors are upgrading. Unicom is the small carrier in China, with only 264M mobile and 75M broadband subscribers. In 2016, they added 11M mobile customers but only about 2M broadband. China Mobile's 1.3M LTE cell sites and massive fiber home build is pulling ahead. In 2016, they added 27 million mobile subs (to 849M) as well as 22M broadband (to 77M.) China Telecom has been adding LTE towers at a rapid pace. In 2016, China Telecom added 17M mobile (to 215M) and 10M broadband (to 123M.) 

China Unicom did not match the investments of the others. They had no choice but to cut prices & raise marketing expenses. Apparently, the Chinese market knew this profit warning was coming. The stock was not forced down. (This week, BT was down $8B and Verizon down $10B.) I wasn't particularly surprised either. I have been watching the nearly incredible build by China Mobile. China Telekom responded but CU held back. It looked like they were burying their heads in the sand.

I do not pick stocks, especially from 12,000 miles away and without a good knowledge of the market.

 It is quite possible the share price, down >30% in the last year, already reflects the problems I'm reporting.

The Chinese government is among the first to recognize that the physical network is close to a natural monopoly. They told the companies to come together with a single tower company, which is now operational and hoping to IPO. That savings from the shared network will be in the billions. That should be a major improvement for Unicom.

Telecom reports 106M on fiber home, up 35M on the year. Nearly all the 77M at China Mobile are fiber home. I don't have a number on China Unicom's fiber base. Loring Wirbel notes China over 200M fiber home lines, 3/4ths of the global total. Mobile figures can be somewhat creative, but a check on equipment sales confirms both mobile and landline figures are reasonably accurate. 

A MTW (More to Write) article is one that I feel is incomplete. If I ever have time, I'll come back and research in more depth.  

 Profit Warning 

This announcement is made by China Unicom (Hong Kong) Limited (the "Company", together with its subsidiaries, the "Group") pursuant to Rule 13.09 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong). In 2016, the Company endeavoured to attain long-term sustainable development, actively promoted the implementation of the new development strategy centred on “Focus, Cooperation and Innovation” and strived to mitigate the underlying shortcomings. The Company showed early signs of turning around the unfavourable conditions in business development. Business momentum and service revenue stopped deteriorating and stabilized. Our mobile business has achieved initial success in overcoming operational challenges and mobile billing subscribers reached 264 million in 2016, registering a net addition of 11.505 million and successfully turning around the downward trend in mobile subscribers for consecutive months in 2015. Within that, the number of 4G subscribers reached 105 million, representing a net addition of 60.395 million. To promote long-term sustainable development, the Company braved short-term profit pressure, strengthened its fundamental capabilities, and increased cost initiatives as appropriate to strive for a gradual turnaround. The profit attributable to the equity shareholders of the Company in 2016 is expected to be down by about 94% as compared to 2015, but it showed significant improvement from the loss attributable to the equity shareholders of the Company (excluding the gain on disposal of tower assets) of approximately RMB 3,363 million in the second half of 2015. The profit attributable to the equity shareholders of the Company decreased in 2016 mainly because no gain on disposal of tower assets was expected in 2016, the addition of tower usage fee, higher energy charges and property rentals, etc. led to an expected substantial increase year-on-year in network, operation and support expenses in 2016, and selling and marketing expenses were expected to increase substantially yearon-year in 2016. Going forward, the Group will strengthen the determination in upholding the strategies and execution capability, and continue to deepen implementation of Focus Strategies in order to steer the Group onto the path of healthy development


April 18

“My three biggest customers are marching to 7 and 5 nanometers.” Lip-Bu Tan. Moore’s Law ain’t dead yet.

Eric Xu, current Huawei Chairman, said consumers would find no “material difference between 4G & 5G.” Dozens of top engineers agree the "5G Revolution" is hokum, including  DT CTO Bruno Jacobfeuerborn, FT/Orange SVP Arnaud Vamparys, and BT CEO Gavin Patterson.
     Politicians and marketers pushed b_______. What’s coming for 5-10 years is good for telco capacity but otherwise disappointing. Unfortunately. 
     On the other hand, mmWave & Massive MIMO are improving at a ferocious rate, advancing telco capacity enormously. Massive MIMO has made it practical to use 3.5 GHz frequencies, a second remarkable booster. The "5G Revolution" is dead; Long Live the real 5G and advanced wireless!
U.S. attacks on Huawei and ZTE look to be an historic disaster.

China’s logical response is to invest to become independent of the U.S. They already have $100B on the table for memory chips and are rumored to add another $100B. Huawei/HiSilicon already holds their own against Qualcomm and everyone else in the world. 
    Zeng Xuezhong of Spreadtrum, world #3 mobile chipmaker, confirms: China will “speed up the chip R&D investment that is self-controlled and self-researched. We must never forget to make it bigger and stronger.”
     U.S. warships patrolling China’s seas inspire security fears. So does Trump’s threat to a country on China’s border."Military solutions are now fully in place, locked and loaded, [for] fire, fury and frankly power, the likes of which the world has never seen before.”
     China would be stupid not to have domestic capacity just in case. The Chinese leadership is not stupid.
The year's best wireless conference is next week. Ted Rappaport, Sandeep Rangan and colleagues bring the world's best engineers to the Brooklyn 5G Conference Summit. This year, Paulraj, Onoe, Fettweis, Katabi, and their peers are coming. Do not miss the webcast, .

April 10

A special report: Who Are The Three Billion? The Color Of The Net Has Changed
1/3rd wireless only, 2/3rds in Global South, 75% not native English speakers.