DJ China's No 2 Phone Co Drops Plan Linked To US Deal-Report
Dow Jones News Service ~ June 4, 2000 ~ 3:47 pm EST
BEIJING (AP)--China's No. 2 telecommunications firm has scrapped plans for a mobile phone network using a U.S.-developed technology standard, the official China Daily reported Sunday.
The report lends further evidence that China United Telecommunications Corp., or Unicom, is backing out on a licensing deal with San Diego-based Qualcomm Corp. to build a network based on the CDMA, or code division multiple access, standard.
The February deal drew much fanfare, coming after the U.S. government lobbied China to expand use of CDMA in a market dominated by GSM, the European developed standard popular in most of the world. Word that Unicom was reconsidering over the last few weeks has battered Qualcomm's stock.
The China Daily cited an unnamed Unicom executive as saying that the timing of constructing the CDMA system "has become unfavorable." But Unicom will push ahead with longer-term plans to use a successor technology, called CDMA2000, the executive was quoted as saying.
Telecommunications analysts believe building a network on current CDMA technology makes little sense for Unicom: The company has already invested billions of dollars in a GSM system, serving 6.5 million subscribers, and new technologies will make both obsolete in the next few years.
Unicom and its underwriters for a planned public stock issue have told potential investors in recent weeks that the proceeds will be used to further develop its GSM network.
The China Daily report offered no details on Unicom's plans for a CDMA2000 network, and executives at Qualcomm and Unicom could not be reached for comment Sunday.
Qualcomm could still benefit. It and other companies, such as Lucent Technologies Inc., that make CDMA equipment are also pushing CDMA2000 as a third-generation standard to replace both CDMA and GSM.
(END) DOW JONES NEWS 06-04-00
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