China Unicom "Very Close" To Using CDMA Network - Source
Dow Jones Newswires
BEIJING -- Chinese leaders have signaled Qualcomm Corp.'s (QCOM) top executive that the country is "very close" to developing a wireless network using Qualcomm's CDMA technology, a source familiar with the situation said Tuesday.
Qualcomm Chief Executive Irwin Jacobs met on Friday with Chinese Premier Zhu Rongji and Minister of Information Industry Wu Jichuan. He also met with top executives of China United Telecommunications Corp., or Unicom, the country's No. 2 telecommunications carrier.
Following those meetings, Qualcomm and other CDMA backers are "very optimistic" that Unicom will soon begin upgrading the small CDMA system it controls, according to the source, who declined to be identified.
The positive meeting is the clearest sign yet that the fortunes of Qualcomm and its CDMA technology in China are again riding high after months of uncertainty that have tormented Qualcomm's share price.
Qualcomm signed a deal in February to license its code division multiple access - or CDMA - wireless technology to Unicom for a network that was supposed to have 10 million subscribers by the end of this year.
But in the run-up to an initial public offering in June, Unicom executives said they had shelved plans for current-generation CDMA. Instead, Unicom said it planned to wait two to three years for a later generation of CDMA technology, one on which Qualcomm's claim to revenues is less solid.
The situation is "getting very close back to February," said the source. "The Premier and all the ministers have been very positive."
Unicom's decision this summer to shelve CDMA sent Qualcomm's stock into a nosedive. Investors worried that it would hurt the company's prospects in China's fast-growing wireless market, the world's second-largest, where almost all of the current 65 million mobile subscribers use a competing European standard called global system for mobile communications, or GSM.
Qualcomm shares in New York traded recently near $80, above their mid-summer lows of less than $60, but well off the $154 level in late March, after the Unicom deal had been signed.
Qualcomm's fortunes in China have improved in recent weeks. Unicom Chairman Yang Xianzu hinted last month that his company would develop a wireless network that the government is making it take over from the military. But he declined to comment on any specific plans.
"Of course we want to make some renovations and some upgrading" of the CDMA network, Yang told a news conference. "If you build a network and it doesn't have adequate scale, then it won't have good coverage. If it doesn't have good service, it won't be welcomed by users, and it won't have revenue."
It remains unclear exactly when Unicom will start moving on the CDMA network, and how large it intends to make it. The source also couldn't say precisely which version of Qualcomm's CDMA technology Unicom might use.
"The number (of users in the network) has not been finalized yet, but the direction is finalized," said the source.
A Western diplomat in Beijing who tracks the telecom sector said he expects Chinese officials to make an announcement on CDMA use by the end of the year.
"Obviously they are ready to take some kind of action," said the diplomat |
