The company asked equipment makers such as Nokia Oyj and Ericsson AB to submit bids for the network, estimated to be worth 20 billion yuan, based on a homegrown standard, Chen Haofei, industry group TD-SCDMA Forum‘s secretary general, said in a phone interview. Beijing-based China Mobile Communications Corp. will spend 4 billion yuan on subsidies for the third-generation, or 3G, handsets, he said. The orders provide some guidance on the issuance of 3G licenses in China, whose government has yet to say when it will award the permits. The winner will build the network based on the locally developed time division synchronous code division multiple access, or TD-SCDMA, standard that needs to be completed by October for a commercial trial of the technology, Chen said. „Given that the license will only be awarded after the trials, it looks like the issuance may be pushed to early 2008,” Francis Cheung, an analyst at CLSA Ltd. in Hong Kong, said today.
„The government likely wants to ensure success of a homegrown technology, and this would require the support of a strong operator like China Mobile.” He rates the stock „buy” with a target price of HK$90. The network will cover eight cities in China, including Beijing and Shanghai, TD-SCDMA’s Chen said. Li Jun, a spokesman for China Mobile, and Rainie Lei, a spokeswoman at Hong Kong- listed unit China Mobile Ltd., declined to comment. Shares of China Mobile rose 3.2% to HK$712.05 as of 3:21 p.m. in Hong Kong, while the Hang Seng Index gained 1%.
In January last year, the government selected TD-SCDMA as a 3G standard and said it is considering the other two technologies, Wideband CDMA and CDMA-2000. The TD-SCDMA Forum was formed in December 2000 by eight companies – China Mobile, China United Telecommunications Corp., China Telecommunications Corp., Datang Telecom Technology Co., Huawei Technologies Co., Motorola Inc., Nortel Networks Corp. and Siemens AG – to promote and develop the use of the technology. ZTE Corp., Datang Telecom, Huawei, Alcatel Shanghai Bell Co., China Putian Corp., Fiberhome Telecommunication Technologies Co. and TD Tech Ltd., a venture between Siemens Communications Group and Huawei, were also invited to bid to build the network, according to Chen.
Thomas Jonsson, a Beijing-based spokesman for Nokia, confirmed the company is taking part in the bidding. Tu Min, a Beijing-based spokeswoman for Ericsson, and James Wen, a Shenzhen, southern China-based spokesman for ZTE, declined to comment. Sissi Xiao, a Shenzhen-based spokeswoman for Huawei, said the company will bid through TD Tech, its venture with Siemens AG. Liu Jie, a Beijing-based spokesman for Datang Mobile Communications Equipment Co., part of Datang Telecom group, said his company is joining in the bids and declined to give more details. Alcatel Shanghai Bell said in an e-mail that the company is bidding in partnership with Datang Mobile. (Bloomberg)
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