Foreign firms marginalised as China Mobile hands out 4G contracts

China Mobile has awarded over half of its lucrative 4G contracts worth 20 billion yuan [£2.1 billion] to Chinese firms with foreign companies awarded just a third between them.

Industry sources quoted by Reuters report Huawei and ZTE were the main beneficiaries of the tender that gives them access to the network’s huge 740 million person subscriber-base and comes ahead of a possible deal between the mobile network and Apple.

"This is the tender that global telecom equipment vendors have been vying for this year. Even though we see Huawei and ZTE getting the bulk of the contracts and foreign vendors getting around a third, I'm sure they will keep going back to China Mobile and get a bit more share,” an industry source said.

The two Chinese firms earned 25 per cent each of the “total 4G procurement in China Mobile’s tender” for the year. European firms Ericsson, Alcatel-Lucent and Nokia Siemens Networks (NSN) were all able to secure around 10 per cent each.

Huawei has a big presence in the European 4G market with a €1 billion [£856 million] five-year contract to help implement Italy’s network signed back in April. This followed similar deals with EE in the UK and Vodafone in Germany. Despite this, the US and Australia continue to give the Chinese company short shrift by shutting them out.

China Mobile plans to construct 200,000 base stations in the coming year and the company has only spent a third of its full year capital expenditure of 190.2 billion yuan [£19.8 billion] so far in 2013, with the 4G contracts expected to accelerate their spending.

The clamour for the 4G contracts has as much to do with a possible tie up with Apple as it does the firm’s subscriber base, which is estimated at around 65 per cent of the total market. Many are speculating that Apple’s lower cost iPhone 5C, set to be unveiled on 10 September, will open the door for a partnership that will see China Mobile become the final Chinese mobile network offer the iPhone to its subscribers.

China Mobile laying on a 4G network was reportedly key to any agreement with Apple being signed and will put the Cupertino-based in direct competition with Samsung, which has a 25 per cent share of the Chinese market.