China executives play down Qiao Xing <XING.O> news
By Matt Pottinger
BEIJING, Sept 1 (Reuters) - Chinese telecoms executives played down on Friday the significance of Qiao Xing Universal Telephone Inc's announcement -- which sent its Nasdaq share price soaring -- that Beijing would help fund its CDMA research.
There were still formidable hurdles to the company selling CDMA mobile equipment in China, they said.
Qiao Xing, a China-based telecoms equipment maker, saw its stock rise almost 72 percent on Thursday -- the biggest gainer on Nasdaq -- after it announced the Chinese government would help fund its research on CDMA mobile technology.
Qiao Xing's stock closed up $8-9/16 at $20-1/2.
But the research grant, which Qiao Xing's chairman said would be around 10 million yuan ($1.21 million) this year, was by no means a green light for the company to manufacture or sell CDMA equipment, industry executives said.
"This is a governmental fund to build up research and development capability," said an executive at another Chinese telecoms firm that won a grant.
"It has nothing to do with markets."
A booming Chinese market for CDMA-technology cellular phones and network equipment will be crucial if Qiao Xing is to profit from its research grant.
What is more, current prospects for CDMA in China look grim.
CDMA DOESN'T LIVE HERE
Of the country's mobile phone service providers, only the two smallest -- Great Wall Telecom and China Century Mobile Communications -- operate networks using the U.S. standard.
Combined, those networks have only about 200,000 subscribers -- a mere droplet in the world's second biggest mobile phone market, which has a total of 60 million users.
The country's three other mobile operators, China Mobile, China Unicom and China Telecom, use either the European GSM or Japanese PHS technological standards.
While China Unicom once expressed interest in rolling out current generation CDMA networks, it announced in June it had scrapped the plan following a goverment freeze on the technology.
The company has said it might consider building more sophisticated next-generation CDMA networks, but analysts say it would take two to three years for them to be rolled out on a large scale.
NO LICENCE FROM QUALCOMM
Even with the Ministry of Information Industry grant, Qiao Xing will be unable to proceed with researching CDMA until it negotiates royalty rates with San Diego-based Qualcomm Inc <QCOM.O>, which holds the patents on the technology.
"We are applying for intellectual property rights from Qualcomm right now," Qiao Xing Chairman Wu Ruilin told Reuters from the company offices in the southern province of Guangdong. Qiao Xing has built a joint venture factory to make CDMA equipment with South Korean giant Hyundai Electronics Industries Co Ltd <00660.KS>, but for now the plant is silent.
A top executive at Hyundai, which owns 40 percent of the venture, said he was confident Unicom has had a change of heart on CDMA and would roll out networks by the end of this year.
"It's my understanding that China Unicom is working out a CDMA business plan," said C. Huh, chief China representative of Hyundai Electronics.
Wu, asked whether the joint venture would be able to meet its announced target of $500 million in annual Chinese CDMA sales and $100 million in profits in 2001, said: "If the market develops smoothly, this target estimate should be accurate."
($1=8.278. Yuan)
08:32 09-01-00 |
