UPDATE 1-Unicom takes step forward on China CDMA network
3/28/2001 6:09:00 AM
(Updates throughout)
By David Lawder
HONG KONG, March 28 (Reuters) - China Unicom Group took a concrete step on Wednesday toward building a long-awaited wireless network using Qualcomm Inc's (QCOM) CDMA technology, unveiling the project's US$2.42 billion first phase to 13 prospective equipment vendors.
Unicom Group, the Beijing parent of Hong Kong-listed China Unicom Ltd (0762) , China's second largest mobile phone company, gave details of the project to foreign and domestic network providers who were invited to bid on the project, vendors said.
The international vendors included Lucent Technologies Inc (LU) , Nortel Networks (NT) , Motorola Inc (MOT) and Ericsson (LMEB) , an official with a foreign company invited to bid said.
CDMA is a mobile phone technology that allows phone companies to cram more calls and information across limited airwaves than competing GSM (global system for mobile communications), the standard promoted by European firms.
Qualcomm has been waiting for years to crack the China wireless market and has seen its shares driven up and down by see-saw statements by Chinese regulators and Unicom officials on near term CDMA deployment plans in the mainland.
Qualcomm owns patents on the CDMA or code division multiple access wireless technology and earns royalties from sales of CDMA network equipment and handsets.
Even as Unicom's presentation at a Beijing hotel ended, state media were already labelling the project as fraught with risk in a market dominated by GSM.
"Unicom's CDMA huge gamble starts; nine domestic firms and four foreign firms compete for the 20 billion yuan cake," blared a headline in Beijing's official Financial Daily.
The newspaper did not name the prospective bidders, but said the results of the bidding would be announced in April. It said San Diego, Calif.-based Qualcomm was not a direct bidder, but would benefit by earning royalties on the project.
Chinese vendors included Shenzhen Zhongxing Telecom Co Ltd (0063) , Datang Telecom & Tech Co Ltd (600198) and Nanjing Panda Electronics Co Ltd (600775) (0553) .
LONG WAIT ENDING?
In Hong Kong on Tuesday, China Unicom Ltd vice president and executive director Li Zhengmao told reporters that the listed company would invest 20 billion yuan (US$2.42 billion) in the network, which would accommodate 13.3 million subscribers.
"The expectation is that once the first phase is successful, the second phase will be even larger," said a foreign telecom equipment vendor.
China Unicom Ltd, which by far lags behind China's top mobile phone group, the all-GSM China Mobile (Hong Kong) Ltd (0941) , would operate the CDMA network under a leasing contract, Li said. The unit also has the right to purchase the network from its parent at cost, he added.
That should cut risk to investors, said telecom analyst Marvin Lo at BNP Prime Peregrine in Hong Kong.
"This will give them an additional product to present to customers without having to invest heavily up front," he said.
Lo said that he believes second generation CDMA technology could be successful in a market where millions of new GSM handsets are put into service every month.
The keys will be CDMA handsets equipped with GSM smart cards cards that allow customers to roam outside their home areas and a better quality image.
"At the moment still customers still perceive China Mobile as better in terms of GSM quality. (China Unicom) could try to package something that has higher quality services on the CDMA network," Lo said.
However, he added that it would take time to build up a high quality CDMA network from scratch.
After surging in early trade, China Unicom shares ended 0.58 percent lower at HK$8.55 on Wednesday. In Nasdaq trade on Tuesday, Qualcomm shares were among the most active counters,surging US$3-1/4 or 5.74 percent to US$59-7/8.
(US$ = 8.28 yuan)
Rtr 06:09 03-28-01 Copyright 2001, Reuters News Service
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Even as Unicom's presentation at a Beijing hotel ended, state media were already labelling the project as fraught with risk in a market dominated by GSM.
?
It will be interesting to see if we find state comments "fraught with risk". Perhaps the media used Babelfish for translations? <g> |
