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Huawei and ZTE win contracts to build 200,000 5G base stations

Chinese telecom giant Huawei and hometown rival ZTE were the big winners in China Mobile’s latest tender of 5G contracts, with the pair snapping up over 85% of base stations, according to the results announced Tuesday by the state-owned telecom carrier.

The contracts to build 232,143 fifth-generation wireless network base stations in 28 provincial-level regions were put out for tender in early March. Huawei Technologies Co. Ltd. won the lion’s share and will build 57.2% of the base stations, while 28.7% went to smaller peer ZTE Corp., according to statements released by China Mobile Tuesday.

Another Chinese enterprise — a consortium between two little-known companies — took a 2.6% share. The only foreign company to win any tenders was Sweden’s Ericsson, with an 11.4% share.

The contracts were valued at 37 billion yuan ($5.2 billion), with China Mobile paying 153,000 yuan on average for each 5G base station, about a quarter less than the low end of what the market predicted it would pay, which was from 200,000 yuan to 250,000 yuan, according to a note released by consultancy Jefferies on Tuesday.

China Mobile is the largest of country’s three largest state-owned carriers. The company has been at the center of Beijing’s effort to roll out 5G networks across the country. China plans to build a total of 630,000 base stations by the end of this year, with China Mobile responsible for about half of that total. As of the end of February, China Mobile had 80,000.

The company had said it would spend 180 billion yuan on 5G this year.

Huawei is a world leader in 5G equipment. The results of China Mobile’s latest batch of 5G contracts show the home market could be a safe haven for the company, as it faces an increasingly hostile environment overseas amid U.S. sanctions and growing suspicion over its ties to the Chinese government and military, something it has denied. On Tuesday, Huawei reported that its carrier business last year recorded a modest 3.8% increase even as countries around the world raced to roll out 5G networks.

Jefferies’ research note said it was not surprising that Finland’s Nokia, a major manufacturer of 5G gear, wasn’t one of the companies to win contracts.

“Performance of Nokia’s 5G equipment is lagging behind,” Jefferies said. The note pointed out that Nokia’s previous CEO had said that the company doesn’t see much profit potential in China’s 5G market, and the company would adjust its offerings in the country accordingly.

―Caixin Global

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