China Issues 5G Licenses as Race to Build Networks Heats Up

(Bloomberg) -- China approved four operating licenses for 5G networks, setting the stage for the super-fast telecommunications system amid simmering tensions with the U.S. over technology and trade.

The country’s three state-owned wireless carriers and China Broadcasting Network Corp. were granted licences for full commercial deployment, according to state broadcaster CCTV. The operators, China Mobile Ltd., China Telecom Corp. and China Unicom Hong Kong Ltd., have been testing the technology in several cities including Beijing and Shenzhen.

Full deployment of 5G networks in a country with almost 1.6 billion wireless phone subscriptions is expected to boost local companies designing gear for applications in autonomous driving, robotics, remote surveillance and virtual reality. The faster-than-expected approvals also come as Shenzhen-based Huawei Technologies Co., the world’s largest manufacturer of networking equipment, has vowed to maintain its lead in the face of a U.S. campaign pressuring allies not to use the company’s products.

The battle over 5G network suppliers is part of a broader push by the Trump administration to check China’s rise as a global technology powerhouse.

China continues to welcome foreign enterprises to its 5G market, Minister of Industry and Information Technology Miao Wei said Thursday, after the licenses were announced.

Shares of some 5G-related companies fell in Hong Kong and Shanghai trading after the license announcement, trimming gains made earlier in the week on expectations the companies would benefit from the push for the new networks.

China Tower Corp., the three major carriers’ infrastructure provider, fell 3% as of 10:50 a.m. in Hong Kong, paring its advance in the past four days to 9.1%. ZTE Corp., which makes handsets and telecom gear, dropped 4.3%, trimming its four-day rally to 7.1%.

Betting on the fate of the nation’s next generation of telecom networks has been one of the year’s hottest trades in China and Hong Kong. An index of telecom-related shares is up 20% this year, led by a 54% rally in ZTE’s Shenzhen-traded stock.

Beijing-based Xiaomi Corp. in March said it would introduce China’s first 5G phone in May or June. Huawei and ZTE, have also said they intend to offer handsets compatible with the technology this year.

Introducing 5G will directly add 6.3 trillion yuan ($912 billion) to economic output and 8 million jobs by 2030, the China Academy of Information and Communications Technology estimates.

(Updates with share prices from sixth paragraph.)

--With assistance from Gao Yuan and Amanda Wang.

To contact the reporter on this story: Jinshan Hong in Hong Kong at jhong214@bloomberg.net

To contact the editors responsible for this story: Sam Nagarajan at samnagarajan@bloomberg.net, Dave McCombs

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