Chinese mobile firm eyes Qualcomm-style networks
MONDAY, SEPTEMBER 25, 2000 6:26:00 AM EST
By Matt Pottinger
BEIJING, Sept 25 (Reuters) - China's second biggest mobile phone firm said on Monday it will take over and upgrade a handful of cellular networks that use Qualcomm Inc's technology QCOM, another sign things are looking up in China for the U.S. firm.
But Yang Xianzu, chairman of China United Telecommunications Corp, declined to say whether his company had revived plans for a large-scale network potentially worth billions of dollars to Qualcomm and North American and South Korean equipment makers.
China United Telecommunications, or China Unicom, has 14 million subscribers on its networks, which use a European wireless technology that competes with Qualcomm's CDMA standard.
But the government ordered Unicom in July to take control of a small military-backed company which owns trial cellular networks based on CDMA (code division multiple access).
Yang told reporters his company was finalising its acquisition of the military-backed company, Great Wall Telecom, and said the networks would be upgraded and possibly expanded.
TIGHT-LIPS ON BIGGER PLANS
"Great Wall is now in the process of being handed over to China Unicom," Yang told a news conference attended by telecommunications industry chiefs.
"Once it is in the hands of Unicom, it will go through rennovations and technology upgrades," he said.
Hinting that the networks would be expanded, he said: "Without adequate scale, there will not be adequate coverage or service and thus it will lack popularity and revenues."
Analysts estimate that Great Wall has only about 200,000 subscribers, a mere fraction of the 65 million users who make China the world's second biggest market, after the United States.
But Yang refused to say whether the company had revived an aborted plan to build a large-scale CDMA network.
"Before I make a decision on it, I cannot forecast the result," Yang said. "If I made a forecast that failed to materialise, I would have been irresponsible towards everybody."
Unicom, the state-owned parent of Hong Kong-listed China Unicom Ltd CHU 0762, pledged last year to roll out CDMA networks with capacity for 10 million subscribers.
But in March, it became embroiled in politics and red tape at the Ministry of Information Industry, and Unicom announced in June that the CDMA plan was dead.
CHANGES IN THE MARKET
Since then, shifting winds in the Chinese telecoms industry have caused Unicom to reconsider.
First came the order for Unicom to take control of Great Wall's networks. Soon afterwards, Chinese telecoms equipment makers which had plunked at least $200 million into CDMA production began lobbying Unicom to revive its CDMA plans.
Several Chinese and Western telecoms executives told Reuters earlier this month that Unicom has signalled it might begin building a massive CDMA network next year.
Since Qualcomm owns key patents on CDMA, it stands to earn meaty revenues from each handset or piece of equipment sold.
Telecoms equipment manufacturers, including Lucent Technologies LU of the United States, Nortel Networks NT of Canada and Samsung Electronics 05930 of South Korea would also be eligible to win big contracts.
Yang declined to say when Unicom's acquisition of Great Wall would be completed, saying the companies were trying to resolve debt problems at Great Wall.
"Great Wall does have debt, but it is a problem that can be solved," he said.
Rtr 06:26 09-25-00 Copyright 2000, Reuters News Service |
