Reshuffling of the industry
SUMMARY
Ecosystem analysis suggests a TD-LTE commercial launch in 2013
We take an ecosystem view to assess the commercial readiness of TD-LTE
in China. Areas we analyzed include: 1) spectrum allocation; 2) network
equipment; 3) device/chipset readiness; 4) system engineering designs;
and 5) regulatory considerations. While challenges remain, we believe
progress has been mostly on track per plans for commercial service.
OUTLOOK
A 4G service launch by China Mobile to reshape the industry
A 4G commercial service launch by China Mobile in 2013 would likely put
the operator 1-2 years ahead of its competition. While meaningful 4G
contribution would only start in 2014, we believe this has the potential to
reshape the competitive landscape. Early marketing campaign to build
awareness could impact industry dynamics ahead of the service launch.
VALUATION
Upgrade China Mobile to BUY at the start of the 4G cycle
On 4G expectations we upgrade China Mobile to BUY from Hold as we
believe 4G services would put China Mobile in an industry leading
position. While much progress has been made on TD-LTE by China Mobile,
challenges remain to be addressed; we believe this is consistent with
emerging telecom technology at the current phase of development. In our
view, the most significant risks to our 4G expectations are: 1) interoperability
with the underlying 2G/3G networks, and 2) regulatory
considerations. We believe the following areas pose lesser risks given the
progress made to date: 1) spectrum allocation; 2) network equipment;
and 3) device/chipset availability.

Executive summary __________________________________________________________________________ 3
TD-LTE – challenges remain; progress on track _______________________________________________________________________ 3
4G/TD-LTE – “the future, is already here” _______________________________________________________ 4
Spectrum already exists for TD-LTE deployment _________________________________________________ 5
Device supply chain quickly maturing, starting with chipsets ______________________________________ 7
Chipset level support of TD-LTE in early 2013; WCDMA and CDMA2000 to FDD-LTE already supported ___________________________ 7
TD-LTE chipsets drive handset availability ___________________________________________________________________________ 8
Network infrastructure ahead of device availability for TD-LTE ____________________________________ 9
Huawei ________________________________________________________________________________________________________ 9
Nokia Siemens Network __________________________________________________________________________________________ 9
Ericssson _____________________________________________________________________________________________________ 10
ZTE __________________________________________________________________________________________________________ 10
Alcatel-Lucent _________________________________________________________________________________________________ 10
Deployment scenarios – a practical system perspective __________________________________________ 11
Multiband TD-LTE deployment scenario ____________________________________________________________________________ 11
FDD-LTE commercial deployment can also begin; however, challenges for China Telecom in later phases _______________________ 12
Inter-technology handover could prove to be the major challenge ______________________________________________________ 13
Base station upgrade scenarios – not all are created equal _____________________________________________________________ 13
Regulatory considerations – balance between telecom operators and equipment suppliers __________________________________ 14
TD-LTE to reshape China telecom industry _____________________________________________________ 15
Company report ____________________________________________________________________________ 16