China’s Wireless Carriers face huge Loss: Subscriptions drop by  21 Million as Corona devastates the

China’s Wireless Carriers face huge Loss: Subscriptions drop by 21 Million as Corona devastates the

Published on April 10 , 2020

China’s Wireless Carriers face huge Loss: Subscriptions drop by  21 Million as Corona devastates the Nation

Even as China trudges through the rubbles of a pandemic-hit economy, the deadly virus has its clutches over the country’s mobile carriers. There have been huge drops in users as the business activity is cut down drastically by the virus-spread. For the first time in 20 years, China Mobile Ltd., the world’s largest wireless carrier with over 816 million customers, has reported its first net decline. It had reported its first monthly data way back in 2000. 

As per the company’s website, the decline in mobile subscriptions has peaked to 8 million in January and February, the months that witnessed the severity of the virus. Other major players like China Unicom Hong Kong Ltd. saw a reduction in subscription by 7.8 million and China Telecom Corp. reported a loss of 5.6 million users over the period. 

China’s Ministry of Industry and Information Technology (MIIT) earlier had stated that for a period from December 18, 2019, to March 19 2020, there has been a huge decline in cellphone users from 1.600957 billion to 1.579927 billion. The number of landlines too had dropped 840,000 during this period.

The huge dent on an industry that provides essential services countrywide reinstates the crisis the nation is facing at the hands of the raging virus.

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This massive decrease in subscriptions was also attributed to the travel restrictions the government had in the wake of the COVID-19 outbreak. The migrant workers who travel regularly for work often have more than one mobile connection. Most of the workers keep separate subscriptions for home and for their workplace.  Since many haven’t returned to work post the virus outbreak after the Lunar New Year holidays, in late January, their workplace accounts stand cancelled, observes Chris Lane, an analyst at Sanford C. Bernstein & Co.

On Monday, China Mobile shares fell 2.7% in Hong Kong trading as compared to the 4.9% slump for the benchmark Hang Seng Index. China Unicom witnessed a decline of 6.4% while China Telecom hit a 6.3%.

Even though the unusual drop in users is alarming, it is negligible compared to that of the total wireless subscriptions that soar to a combined 1.6 billion for all the three wireless carriers.

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There are hopes of matters getting better this month as factories and businesses in the country resume work and operations, says Lane.

Last year net income for China Mobile fell by 9.5% as the government mandated to slash prices and improve services. As the report goes, the company, which reported earnings last week, has assured a stable revenue for this year. It shows that the drastic loss of subscriptions has not worried about the management, observes Lane. 

As per market capitalisation, China Mobile Limited is listed as the world’s largest mobile telecommunications corporation and also the largest network operator in the world by a total number of subscribers. Though the authorities concerned are confident of an upsurge in the coming months, it is a watch-and-see situation to assess how the Chinese wireless giants handle the dip.

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