China Unicom Plans $12 Bln CDMA System; May Halt Qualcomm Pact
6/3/00 11:55:00 PM
Source: Bloomberg News
Beijing, June 4 (Bloomberg) -- China United Telecommunications Corp., the nation's second-largest phone company, will upgrade its planned wireless-phone network to an advanced $12 billion system and may break its original agreement with Qualcomm Inc., the China Daily Business Weekly reported.
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China Unicom, as the company is known, will drop its planned narrow-band mobile Code Division Multiple Access (CDMA) system in favor of a wide-band CDMA 2000 network, the paper said today.
The new system will require an investment of more than 100 billion yuan ($12.1 billion) the paper reported, quoting an unidentified Unicom official. It didn't say what the originally planned system would have cost.
The timing for constructing a narrow-band CDMA system ''has become unfavorable,'' the official was quoted as saying. The wide- band technology will enable faster wireless transfers of video images and other multimedia.
The new nationwide mobile network will have a designed capacity of 50 million lines, the report said.
Unicom agreed in February to license San Diego-based Qualcomm's CDMA technology for the narrow-band system. Reports quickly surfaced the Chinese government was delaying the project, however.
That agreement with Qualcomm ''could be canceled,'' the China Daily Business Weekly quoted the unidentified Unicom official as saying.
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Qualcomm could still be a big winner in the new arrangement as it holds the rights to more than 50 percent of the technology used in CDMA 2000 systems, the report said.
China Unicom had originally planned to begin CDMA services this summer. It would take at least two years for Unicom to begin a CDMA 2000 system, the report said.
When Unicom agreed to license CDMA in February, Qualcomm spokeswoman Christine Trimble said Unicom expected to have the capacity to provide CDMA phone service to 10 million subscribers this year.
Trimble couldn't be reached for comment today.
Qualcomm's shares lost 14 percent of their value on May 25 and May 26 after the Asian Wall Street Journal said Unicom had no plans to build the CDMA network. While Qualcomm's shares have recovered from their six-month low of $66 1/16 on May 26 to $72 11/16 on Friday, they are still down 19 percent in the past 2 weeks.
China Unicom is now trying to raise $5.26 billion in an overseas share sale which, if successful, may become the largest first-time public offer by a Chinese company.
In its prospectus released last week, the company said it will sell 2.46 billion new shares for HK$11.50 to HK$14.50 a share, or $4.57 billion. It will also sell 36.9 million American depositary shares worth up to $686 million if the offer is oversubscribed. Email this story to a friend Click for printer-friendly format
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