Lucent in Talks With China Telecom on Networks; May Gain on Rivals on WTO
By Biddy Chan
Lucent in Talks With ChinaTel, Others on Networks (Update2)
Guangzhou, China, Nov. 16 (Bloomberg) -- Lucent Technologies
Inc., the world's No. 1 telephone-equipment maker, said it's in
talks with three Chinese telephone companies to help upgrade
mainland networks for Internet-related services.
Lucent already formed a joint venture with China Telecom
group, China's dominant telecoms provider, and is contemplating
``similar relationships' with others, said Gerald Butters,
president of Lucent's optical networking division. China United
Telecommunications Corp. (China Unicom) and China NetCom Corp.
are China's only other state-approved operators.
Such talks could give Lucent an advantage over rivals as
China prepares to join the World Trade Organization under a
landmark agreement reached Monday in Beijing. ``We would expect
to see our business increase on China's entry to the World Trade
Organization,' Butters told reporters in Guangzhou over the
weekend, days before the pact was announced.
Under the agreement, China will allow foreign investors to
own as much as 49 percent of telecom networks immediately after
it joins the WTO, a stake that could rise to 50 percent in the
second year. That's up from zero percent now.
Internet
The same rules apply to Chinese Internet-content providers.
Before reaching the WTO agreement with the U.S., China had said
it would ban foreign investment in Internet-related ventures.
Full details on the terms of the WTO agreement haven't yet
been released.
Internet-related companies praised the pact -- as did
investors. China.com Corp., which provides Chinese-language
Internet content, surged 75 percent yesterday after the pact was
announced.
``One of the advantages that we can anticipate is an
increase in investment into the telecommunications
infrastructure, which is going to help bring down the costs of
telecommunications,' China.com Chief Financial Officer Peter
Hamilton said in an interview. ``And that's one of the major
barriers' to the growth of the Internet in China, he said.
Lucent said it has already been working with Hong Kong-
listed China Telecom (H.K.) Ltd., the China Telecom unit that
owns mobile phone networks in six of China's richest provinces,
on allowing the latter's mobile phone users in the southern
Guangdong province to access the Internet using voice-activation
technologies.
Global Crossing
The new service would start in about nine to 12 months,
Butters said.
``By the spring of next year, the Chinese network will be
the largest telecommunications network on the planet. It will be
larger than the U.S. network, and also the most modern,' he
said. ``They will continue to add subscribers at the rate
equivalent to one complete Canadian telecommunications network
per year for the next 20 years. So from an opportunity
perspective, this represents one of the largest growth areas for
companies like Lucent.'
Lucent and many other foreign telecoms companies are
boosting their investment in China. Nasdaq-listed Global Crossing
Ltd., which is building a global undersea network, said yesterday
it will form a $1.2 billion joint venture with Hong Kong's
Hutchison Whampoa Ltd. to invest in China's fixed-line telecoms
networks and exploit Internet-related opportunities.
According to Goldman, Sachs & Co., an adviser to Hutchison
on the agreement, the number of Internet users in China, most of
whom speak Chinese only, will exceed that of the U.S. by 2005.
``It means there is great need for bandwidth there,' said
Tim Dattels, head of Asia investment banking at Goldman. |
