File photo: VCG

With the fading of China's demographic dividend, the telecom sector should shift to value-based operations instead of relying on an expanding customer base amid lethargic growth, industry insiders said.

Telecom industry growth was stagnant for the first five months of this year, and China Mobile's revenue contracted, the company's Chairman Yang Jie told MWC19 Shanghai on Wednesday, media reports said. 

In the first quarter of 2019, China Mobile reported revenue of 185 billion yuan ($26.8 billion), down 0.8 percent year-on-year, and net profits fell 8.3 percent, according to the company's financial report.

"The telecom industry needs to shift its business model from low margins and quick turnover to a model featuring high quality and efficiency, to overcome the growth difficulties caused by China's fading demographic dividend," Liu Xingliang, a telecom expert based in Beijing, told the Global Times on Thursday.

China is the world's largest mobile market with a subscriber penetration rate of more than 80 percent, which means that the scope for future subscriber growth is quite limited, said a report released by GMSA.

"With millions of tech-savvy consumers in China who are astute social media adopters and users of various applications, there's an increasing demand on operators for improved network performance," said Liu.

China Mobile is on the way to a business model transition as it targeted building 50,000 5G base stations nationwide by the end of 2019, Yang said during the MWC Shanghai.

China Mobile will upgrade its existing 4G base stations to 5G, which will cost less than building new stations. But it's still an expensive project, and it will mean lower profits or even losses in the near future, Liu added.

"Business transitions take time, but you have to take steps for growth in the long run," said Liu.