China Mobile to Start Homegrown 4G in Hong Kong as Demonstration

China Mobile Ltd. (941) will start commercial service with its homegrown, fourth-generation network in Hong Kong this month as the world’s largest mobile-phone company by subscribers moves closer to a nationwide roll out.

The carrier will add services in the city with the 4G standard it backs called TD-LTE, to high-speed operations it began locally in April using an alternative global 4G standard, Cynthia Chan, a spokeswoman for China Mobile Hong Kong, said in a Dec. 14 phone interview.

China Mobile Chief Executive Officer Li Yue is betting the move to faster data networks can help reverse a trend of decelerating revenue. Sales growth will probably slow to about 6 percent this year from almost 9 percent in 2011, according to data compiled by Bloomberg. Starting the TD-LTE service in Hong Kong is “very clever positioning” that should help the company win government approval for the rest of China, said HSBC Holdings Plc analyst Tucker Grinnan.

“The China Mobile Hong Kong launch is really designed to support the TD launch in China, develop the skill and show the Chinese government TD is commercially viable,” said Grinnan. “By deploying a convergent network in Hong Kong, China Mobile is providing a real-world demo,” said the Hong Kong-based analyst, who rates the stock overweight.

The dual network provides users better roaming coverage, while reducing installation and maintenance costs for carriers, Grinnan said. China Mobile will be the first carrier in Asia offering such a dual-mode network, Chan said in an e-mail.

Dual Network

The Beijing-based company will provide details of the new service at a conference tomorrow featuring Tiger Lin, chairman of the Hong Kong unit, and Sean Lee, chief executive officer for the local division, according to the e-mail.

Frequency Division Duplex, or FDD, and Time Division Duplex, or TDD, are the two primary methods of delivering the 4G service based on Long Term Evolution, or LTE, technology.

China Mobile’s Hong Kong unit in 2009 had won a bid for 2600-megahertz spectrum that allowed the carrier to offer FDD service, which began in April. In February, the carrier won a second band of spectrum from 2330-megahertz to 2360-megahertz, which allows the provision of TDD service.

Shares of China Mobile have gained 17 percent this year, while the city’s benchmark Hang Seng Index has gained 23 percent.

China Mobile’s state-owned parent is still conducting trials of the 4G TD-LTE service and has yet to receive regulatory approval for nationwide commercial service. The TD- LTE 4G trial in the rest of China will be expanded to 20,000 base stations in 13 cities in the second half of this year, from seven cities in the first six months, the company said in August. Next year, the carrier plans to expand the trial to 200,000 4G base stations.

Data Traffic

In the first nine months of 2012, data traffic over the carrier’s wireless networks surged 61 percent from a year earlier to 626 billion megabytes, China Mobile said in October. The increase was driven by services including downloads of videos and e-books, the company said at the time.

The Hong Kong demonstration of the 4G TD-LTE network is the latest example of the carrier using the city as a test bed. This month China Mobile also announced it started a mobile television service in Hong Kong. The service has both free and paid channels that can run on tablets and smartphones with Google Inc.’s Android system, and also works on Apple Inc.’s iPhone using a plug-in receiver called a dongle.

To contact Bloomberg News staff for this story: Edmond Lococo in Beijing at elococo@bloomberg.net

To contact the editor responsible for this story: Michael Tighe at mtighe4@bloomberg.net

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