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To: tradeyourstocks who wrote (4917)	5/17/2000 7:44:00 AM
From: tero kuittinen	Read Replies (1) \| Respond to of 34857

The profit angle is an important one. It's good to think of return on investment. That's why you need to consider the GSM manufacturing base that China used so much money to build. There are now several Chinese GSM manufacturers in both handset and network markets. China has had several CDMA networks since 1997, so saying that China "will adopt" CDMA is inaccurate and misleading. They know this technology. And they don't seem overwhelmed. China Unicom had less than 2 million GSM subscribers in early 1999. That was when it seemed at least possible the company might switch to CDMA in a big way. But during 1999, Unicom's subscriber base ballooned by 250% - their GSM subscriber base is now topping 6 million. They're adding half a million new GSM subs every month. That's the important profit angle here - the government gave Unicom full access to China Telecom's GSM network and by doing this they turned Unicom into a hot growth vehicle. Unicom had been unable to compete before; now it suddenly got possession of one of the world's most valuable mobile properties. Look around you - how many operators with a subscriber base in several millions can show 200%-plus annual growth rate? The government decision to grant Unicom special privileges turned this company into a bigger mobile operator than Sprint. Do you think Sprint would risk their 6 million subscriber base by adopting now a new digital standard? This seems to be what you expect from Unicom - that they would undermine one of the biggest and most rapidly growing mobile franchises in the world by setting up a new competitor for their own GSM system. How on earth could they do better than they are already doing? How can they hope for stronger growth than 250%? How can they set up a national CDMA network without draining resources from the GSM network and exposing it to competition from China Telecom? We just saw what launching a new IS-95 network alongside an existing digital system did to DDI in Japan. Nearly 100 million dollar quarterly loss and stalled market share against NTT-DoCoMo. DDI can't ask for a price premium for its CDMA phones against the competition - there is no competitive edge that could be measured in dollars. They are just stuck with the multi-billion dollar bill for building a nationwide network that is not gaining them customers from rivals. I bet Unicom is watching closely. Tero