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Technology Stocks : Ericsson overlook? -- Ignore unavailable to you. Want to Upgrade?

To: Jim Oravetz who wrote (4977)	3/29/2002 12:57:35 PM
From: Jim Oravetz	Read Replies (1) \| Respond to of 5390

Mobile-Phone Firms in China Cut Spending as Slump Spreads By DAVID PRINGLE Staff Reporter of THE WALL STREET JOURNAL LONDON -- The slowdown in demand for mobile-phone network equipment is spreading to China, until recently one of the few bright spots for suppliers. China Unicom Ltd., the second-largest mobile-phone operator in China, this week announced plans to slash capital spending on its mobile-phone network to 7.88 billion yuan ($952 million) in 2002 from 20.78 billion yuan in 2001. Last week, China Mobile (Hong Kong) Ltd., the world's largest mobile-phone operator, said its capital spending for 2002 and 2003 will total US$8.8 billion, or 20% less than originally planned. Now that most wealthy Chinese have a mobile phone, both operators are reining in costs so they can cut subscription rates and attract less-affluent customers. The decision to cut back on spending has a direct impact on Telefon AB L.M. Ericsson of Sweden; Finland's Nokia Corp.; Motorola Inc. of Schaumburg, Ill.; and Germany's Siemens AG, all of which are battling to be the leading suppliers of wireless equipment in China. On top of the slowdown in China, these equipment suppliers are faced with the prospect of a shrinking market in Europe, as heavily indebted mobile-phone operators look to merge operations and cut costs. Just this week, Sonera Corp. of Finland agreed to be acquired by Sweden's Telia AB, while France Telecom SA said it would like to see Mobilcom AG, a German operator in which it owns a minority stake, merge with another operator in the German market. While analysts say such consolidation is necessary for the long-term health of the mobile-phone industry, it is likely to lead to further cutbacks in capital spending in the short term. In Europe, most adults have a mobile phone, but in China, only about 10% of the population has a wireless subscription. Given the Chinese market's huge growth potential, China Unicom's capital-spending cuts were much sharper than analysts had predicted. Sophia Tso, a spokeswoman for the Hong Kong-listed company, said the 2002 budget will increase the capacity of its GSM, or global system for mobile communications, network by five million subscribers, down from capacity growth of 18 million subscribers in 2001. Unicom, which on Wednesday posted a 38% rise in profit for last year, must nonetheless cut costs because, as it adds new, less-affluent customers, the average revenue it earns from each subscriber is shrinking. However, Ms. Tso said Unicom still has enough headroom to sign up an additional 15 million GSM subscribers in 2002 on top of the 27 million subscribers it served at the end of 2001. Unicom's main suppliers of GSM equipment are Motorola, Siemens, Ericsson, Canada's Nortel Networks Corp. and Nokia, Ms. Tso said. China Unicom also indicated this week that its parent company, China United Telecommunications Corp., might not build a CDMA, or code-division multiple access, network as fast as it originally planned. China Unicom, which leases airtime on the CDMA network, said its parent will increase the capacity of the network by more than 10 million users this year, compared with an earlier target of 15 million users. The main CDMA-equipment suppliers to China United include Motorola; Lucent Technologies Inc. of Murray Hill, N.J.; Ericsson; and Samsung Electronics Co. of South Korea, Ms. Tso said.