China's ambitious 5G push heading into slow lane due to coronavirus disruptions

Yangtze Optical Fibre and Cable Joint Stock Co

21/02/2020 07:40

By Josh Horwitz
    SHANGHAI, Feb 21 (Reuters) - Government measures to contain
the spread of the coronavirus in China look set to delay the
rollout of next-generation 5G telecom networks, a key technology
initiative for the country's leadership.
    Tenders for six big 5G projects have been postponed since
Jan.31, government records show. They include an industrial
internet project in Guangdong province, a hospital-related
project in Jiangxi province, and a police-related project in
Gansu province.
    Two leading providers of crucial fiberoptic cables also have
headquarters and key production facilities in Wuhan city, the
epicentre of the outbreak which is still under lockdown.
    In addition to providing much faster internet connectivity,
5G promises to enable a slew of new technology products and
services from self-driving cars to intelligent factories.
    China has made 5G a national priority, aiming to have
nationwide networks and services well ahead of other countries
and last year it pressed telecom operators to accelerate
deployment.
    Even after the outbreak, President Xi Jinping said in early
February that 5G investment might be able to help offset the
decline in consumer spending caused by the virus.  urn:newsml:reuters.com:*:nL4N2AF07P
    But like other companies in China, telecom equipment firms
and network operators are grappling with a logistical nightmare
as travel and quarantine restrictions cause staff shortages and
impede the transportation of goods.  urn:newsml:reuters.com:*:nL8N2AI06H 
    Yangtze Optical Fibre and Cable Joint Stock Ltd Co
 6869.HK , one of two top fibreoptic cable makers based in
Wuhan, said in January it would rely on its plants in other
parts of China to maintain production.
    A company manager told Reuters on Thursday that production
had not yet resumed in Wuhan and that other factories were
operating at 50% capacity. The manager, who was not authorised
to speak to media and did not want to be identified, declined to
comment on the impact on China's 5G plans.
    FiberHome Telecommunication Technologies Co Ltd  600498.SS ,
another Wuhan-based fiberoptic cable supplier, said on its
website it was attempting to keep operations going via remote
work. 
    Suppliers such as Shengyi Technology Co Ltd  600183.SS ,
which makes printed circuit boards and copper cables, and Tongyu
Communication Ltd  002792.SZ , which makes antennas, have said
in company filings that production has suffered delays due to
the virus.
    Construction of 5G bases for China Mobile moved quickly in
late December and January, local media reports quoted a senior
executive as saying last week. But a Beijing division of the
country's top carrier also told media that the coronavirus would
have a definite impact on the 5G build-out.
    "If the carriers cannot get optical fibers in place, they
will probably delay the base station purchases," said Edison
Lee, an analyst at Jeffries.
    China Mobile, rivals China Telecom and China Unicom did not
respond to Reuters' requests for comment.
    An executive at Huawei Technologies Co Ltd  HWT.UL , the
world's biggest supplier of telecom network gear, said this week
the company had sufficient equipment stockpiles to last three to
six months.
    In most countries, 5G deployment has not yet begun or is at 
a very early stage, with network operators proceeding cautiously
in light of the costs and a lack of short-term profit potential.

 (Reporting by Josh Horwitz and the Shanghai newsroom;
Additional reporting by Paul Sandle in London. Editing by
Jonathan Weber and Edwina Gibbs)
 ((Josh.Horwitz@thomsonreuters.com; +86 21 20830007;))