Lucent Missing Out on Chinese Business:
Wednesday August 30 9:56 AM ET
Lucent Missing Out on Chinese Business
HONG KONG (Reuters) - Lucent Technologies (NYSE:LU - news) is missing out on significant revenue opportunity in China because of the country's adherence to the European GSM wireless telecoms standard, Mike Butcher, Lucent's president for international operations, said in an interview on Wednesday.
Butcher said that half the telecoms spending in the world's most populous nation right now is on mobile equipment, as the country furiously builds out its wireless network.
``We get precious little of that, the reason being because China is GSM, and Lucent was very late getting into the GSM technology,'' he said. ``Our percentage market share is very low.''
But, Butcher said, that growth inhibitor also presents a big opportunity for Lucent.
Butcher said he is hopeful that China ultimately approves CDMA (code division multiple access) technology for current generation wireless technology. Beijing-backed China Unicom Ltd's (0762.HK) on-again/off-again deliberation earlier this year over whether to use the CDMA standard, developed by U.S.-based Qualcomm Corp (NasdaqNM:QCOM - news), helped send Qualcomm stock reeling.
But the fate of CDMA in China remains undetermined.
Butcher said CDMA, which is the basis for all third-generation (3G) wireless networks, is preferable to GSM because it can be more easily upgraded to 3G.
``We're still waiting and we're pushing for it to happen,'' he said.
Butcher said China Unicom, China's number-two wireless carrier, began pushing the government for CDMA approval two years ago. ``As time's gone on and it hasn't happened, and they've installed more GSM networks themselves, then you're getting into this confused area.''
While Lucent also makes GSM network equipment, Butcher said China's huge embedded base of networks supplied by European firms makes it difficult for Lucent to penetrate. ``Most of them are upgrade contracts,'' he said.
Still, China is Lucent's largest single-country revenue source outside North America, thanks to its wireline business, which this year will install about 4 million phone lines, Butcher said. A total of 20 million lines were installed in China last year, he said.
Butcher declined to provide revenue figures for the company's China business, which includes about 15 joint ventures and 3,500 employees. Overall, the Asia-Pacific region accounts for about US$3 billion to $4 billion in revenue for Lucent, which posted revenue last year of US$38 billion.
``If China's growing for us at 20 percent a year plus, compounded, then we'd be happy,'' he said.
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