Telecommunication News
- ZTE Corp. clinches China Mobile order
Date: 10-Apr-2007 Sources: (Shenzhen Daily)
ZTE Corp., China's biggest publicly listed telephone equipment maker, clinched an order to supply China Mobile Communications Corp. with equipment for the nation's first high-speed wireless network.
The gear will be for a network based on China's time division synchronous code division multiple access, or TD-SCDMA, technology, ZTE said yesterday in a statement. ZTE said negotiations have yet to be completed and didn't specify the size of the order.
China Mobile's contracts, worth as much as US$3.1 billion, indicate the government is approaching the introduction of so-called third-generation (3G) wireless services in the world's largest mobile phone market by subscribers. The government has said it will offer 3G services for the 2008 Beijing Olympics, without providing a more specific timetable.
'TD-SCDMA is a cornerstone of China's 3G strategy,'' Luo Yanjun, a Shenzhen-based analyst with China Jianyin Investment Securities, said before ZTE's announcement. 'Spending on TD-SCDMA will be significant and ZTE, as the leader in this field, stands to benefit the most.''
China Mobile Communications, parent of Hong Kong-listed China Mobile Ltd., the nation's biggest wireless carrier, began accepting bids from potential suppliers last month for the network, which TD-SCDMA Forum secretary general Chen Haofei estimated will cost as much as 24 billion yuan (US$3.1 billion).
Regulators have delayed the high-speed services, which allow faster Web browsing and downloads, to give domestic companies such as ZTE and Huawei Technologies Co. time to perfect their TD-SCDMA equipment. Domestic carriers may buy 205 billion yuan of 3G equipment, according to government-backed industry group China Mobile Communications Association.
ZTE will probably be the biggest supplier of TD-SCDMA equipment in China, Jianyin Investment's Luo said. Shenzhen-based Huawei, China's biggest telecommunications equipment maker, will be a close second, he said. Sales of TD-SCDMA equipment may contribute 2.4 billion yuan in revenue to ZTE's 2007 earnings, UBS AG analyst George Chu wrote in a February report.
In March, China Mobile Communications asked equipment makers including ZTE, Nokia Oyj and Ericsson AB to submit bids for the 3G network. The network will cover the cities including Beijing and Shenzhen, ZTE said yesterday.
Other companies vying to supply gear for the 3G network included Alcatel Shanghai Bell Co., Datang Telecom Technology & Industry Group, Huawei and TD Tech Ltd., a venture between Siemens Communications Group and Huawei.
State-owned China Mobile Communications is still awaiting government approval for its spending plans, which may come before the end of April, Liu Jie, a Beijing-based Datang spokesman, said before the announcement.
Trading of ZTE's Shenzhen-listed shares were suspended Friday, pending yesterday's announcement. The company also lists shares in Hong Kong.
The government may spend 100 billion yuan to build TD-SCDMA mobile networks, 75 billion yuan on 3G networks using foreign technology and 30 billion yuan to upgrade existing services, Xie Linzhen, vice chairman of China Mobile Communications Association.
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