Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Technology Stocks : The New Qualcomm - a S&P500 company -- Ignore unavailable to you. Want to Upgrade?

To: Ruffian who wrote (6519)	2/15/2000 10:31:00 AM
From: Thomas Tam	Read Replies (1) \| Respond to of 13582

China's Military Building Mobile Phone Empire By Matt Pottinger BEIJING (Reuters) - Army-backed companies are muscling into China's red hot mobile phone market, skirting a ban on military business ventures and offering tough new competition for China Unicom ahead of its Hong Kong listing. The companies ultimately controlled by the People's Liberation Army (PLA) are jumping into the newly-opened market in U.S. standard CDMA networks, which China Unicom is counting on to challenge state giant China Telecom, analysts and company officials said on Tuesday. One of them, China Great Wall Communications, has been operating trial CDMA networks in the cities of Beijing, Shanghai, Guangzhou and Xian for several years. But now another, Hebei Century Mobile Communications Corp, has sprung up with networks in 11 cities in Hebei province that connect to Great Wall's system. The investments appear to be glaring exceptions to an 18-month drive by President Jiang Zemin to sever the bond between the military and big business. What is more, industry regulators appear to be supporting the PLA-backed expansion into telecommunications. ``The military has permission to build local CDMA joint ventures,' said an official at the Ministry of Information Industry, who declined to be identified. China Unicom is planning a multi-billion dollar listing in Hong Kong and possibly New York as early as April. A cornerstone of its strategy is to build nationwide CDMA systems to challenge older GSM networks operated by China Telecom. Unicom Shrugs Off Threat Beijing is keen to avoid duplicating phone networks, and there is a danger China Unicom might find itself shut out of lucrative markets by PLA upstarts that get to them first. But officials at China Unicom say the company will forge ahead regardless, and is prepared to build overlapping networks to face the competition head-on. ``We're allowed to build anywhere in the country,' said Wu Duhua, China Unicom's official in charge of CDMA. ``The demand is huge and duplicating infrastructure won't be a problem,' he said. ``We're stronger than them, we're more capable, and we'll definitely do it better.' Officials at Hebei Century declined to comment. A Hong Kong-based investment banker, who declined to be identified, said the competitive challenge was too small to threaten the success of Unicom's IPO. ``We've heard admission in various circles that yes, there are going to be some military-run cellular networks offering CDMA,' he said. ``If a little guy comes in, he's probably taking share away from China Telecom as well,' he said. ``I wouldn't see it as being a huge issue on the IPO.' A Price War Looms Still, Unicom might find itself embroiled in a price war just as it sets out to build a business. Great Wall is already offering steep price cuts, and analysts said Hebei Century was likely to follow the same strategy to gain market share, despite government price controls. ``It will probably be more difficult for China Unicom to get away with discounts because of their higher profile,' the investment banker said. The PLA was drawn to CDMA in the late 1990s, attracted by a technology that is less susceptible to eavesdropping. Great Wall, a 50-50 joint venture between the PLA and China Telecom, signed up thousands of subscribers before Beijing last year ordered it to hand its networks to China Unicom. But that never happened. Instead, China Telecom pulled out of Great Wall, the PLA maintained its stake in the company and began crafting new partnerships under a different name: Century Communications. The Hebei networks have attracted 15,000 subscribers since they were launched in December, said an executive with Samsung Electronics Co, the sole foreign equipment supplier. ``We've signed a CDMA contract for the entire province of Hebei,' the executive said. ``The scale could reach $200 million in value if they continue expanding network capacity.'