Mobile Migration Has Big Implications
By Tero Kuittinen
RealMoney.com Contributor
7/5/2006 2:41 PM EDT
Click here for more stories by Tero Kuittinen
This column was originally published on RealMoney on July 5 at 2:38 p.m. EDT. It's being republished as a bonus for TheStreet.com readers.
Brazil's Vivo (VIV - commentary - Cramer's Take), India's Reliance, and China Unicom (CHU - commentary - Cramer's Take) have been reported to be considering launching GSM network expansions to substitute for their current CDMA operations.
This potential new wave of GSM (global system for mobile communications) infrastructure expansion is a substantial surprise. Just a few months ago, Vivo, Reliance and Unicom were largely expected to stick with relatively aggressive CDMA (code division multiple access) expansion plans.
Brazil, India and China are the core mobile telecom growth markets, and if the leading CDMA operator in every one of these markets switches to a GSM growth track, the implications for both infrastructure and handset markets are profound.
If these operators move from the contemplation to the operational phase, their actions could spur a dramatic shake-up of the global wireless market and potentially give major long-term benefits to Ericsson (ERICY - commentary - Cramer's Take) and Texas Instruments (TXN - commentary - Cramer's Take) most notably.
Potential losers in this mobile migration include Qualcomm (QCOM - commentary - Cramer's Take), Verizon (VZ - commentary - Cramer's Take) and Sprint (S - commentary - Cramer's Take).
GSM Surprise
Brazil's Vivo, which has 30 million subscribers, was reported last week to have opened GSM network order negotiations with Ericsson, Siemens (SI - commentary - Cramer's Take), Nokia (NOK - commentary - Cramer's Take), Alcatel (ALA - commentary - Cramer's Take) and Huawei.
Reliance and Unicom are both already dual-standard operators -- but they are now apparently considering jacking up their GSM coverage decisively while de-emphasizing future CDMA buildup. Reliance has 20 million subscribers, China Unicom more than 110 million.
The first phase of the GSM network rollout likely would cost $2 billion to $3 billion. India's Reliance is seen planning a GSM expansion of 10 million to 12 million phone lines -- major orders likely coming from Ericsson, Nokia and Motorola (MOT - commentary - Cramer's Take).
The nearly simultaneous nature of these moves is now a topic of intense speculation in the telecom world. Why is the speculation about the GSM switches of these three operators heating up in June 2006?
Part of the reason probably has to do with CDMA licensing terms with Qualcomm (QCOM - commentary - Cramer's Take). On Monday, yet another CDMA legal wrangle emerged as Texas Instruments (TXN - commentary - Cramer's Take) and Broadcom (BRCM - commentary - Cramer's Take) issued a complaint about Qualcomm to South Korea's Fair Trade Commission. In June, several legal maneuvers involving the Nokia-Qualcomm fight rocked the telecom sector. |
