Nokia Invests in China 3G

Sets up $111M joint venture with China Putian to develop 3G network equipment, leaving Nortel out in the cold UPDATED 1:45 PM

October 13, 2005

3 Min Read
Nokia Invests in China 3G

As expected, Nokia Corp. (NYSE: NOK) has set up a joint venture with a domestic vendor in China to develop technology based on China's home-grown 3G standard, Time Division Synchronous Code Division Multiple Access (TD-SCDMA).

Nokia's partner is state-owned mobile and fixed network vendor China Putian, with which it already develops GSM technology. The two companies will jointly invest 900 million renminbi ($111 million), with Nokia owning 49 percent of the new venture and China Putian the remaining stake.

The venture will "focus on R&D, manufacturing and sales of 3G network solutions for TD-SCDMA and WCDMA technologies," Nokia stated. Unstrung first reported Nokia's intentions last month after analysts at Merrill Lynch & Co. Inc. anticipated an announcement. (See Wireless Nuggets.)

Developed by the Chinese Academy of Telecommunications Technology, TD-SCDMA [ed. note: though it has the sound of a skin disease] has been approved by the 3rd Generation Partnership Project (3GPP) and combines older Time-Division Multiple Access (TDMA) with Time-Division Duplexing (TDD) techniques of broadcasting over a single chunk of spectrum, rather than the normal two bands. (See TD-SCDMA Forum Joins 3GPP.)

But hold on a minute... A 3G joint venture with China Putian with the local firm owning 51 percent of the new firm. Doesn't that sound familiar? It certainly will in the corridors at Nortel Networks Ltd. (NYSE/Toronto: NT), which announced just such a tieup in January this year. And with both joint ventures naming the same location -- Wuhan, the capital city of China's Hubei Province -- won't that make things, well, a little awkward? (See Nortel Teams on Chinese 3G.)

Unfortunately Putian had already finished its working day as Unstrung put in a call, but Nortel cleared up the possibility of a significant conflict of interest by revealing that its joint venture with Putian has now been abandoned. (See Nortel Suffers China 3G Setback.)

Nokia still has some catching up to with some of its other vendor rivals, though. Alcatel (NYSE: ALA; Paris: CGEP:PA) said in August it's ready to deliver TD-SCDMA kit to carriers with its partner Datang Telecom Technology Co. Ltd., while Ericsson AB (Nasdaq: ERICY) announced its Chinese 3G partnership with ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) in May this year. Meanwhile, Siemens Communications Group is doing its Chinese 3G stuff with Huawei Technologies Co. Ltd. (See Alcatel, Datang Prep TD-SCDMA, Alcatel Tangos With Datang, Ericsson Bets on Chinese 3G, and Huawei, Siemens Push 3G Deal.)

That leaves Lucent Technologies Inc. (NYSE: LU) and Motorola Inc. (NYSE: MOT), both of which are members of the TD-SCDMA Forum, without local Chinese partners. UTStarcom Inc. (Nasdaq: UTSI) has been touted as a potential collaborator. (See Trio Hush on Chinese 3G.)

The spoils for the equipment firms are due to be huge once the operators start their 3G rollouts. Ericsson has estimated that up to $12 billion could be spent on 3G network systems in the first three years after the licenses are awarded.

But it seems not all's going to plan with TD-SCDMA tests, and that may delay the awarding of 3G licenses. (See Wireless Wumors.) No specific timeframe has yet been set for 3G license awards, but the Chinese government is expected to make it a condition that at least one or two of the country's carriers deploy TD-SCDMA equipment in their 3G networks.

Mobile operators China Mobile Communications Corp. and China Unicom Ltd. (NYSE: CHU), plus fixed-line carriers China Netcom Corp. Ltd. (NYSE: CN; Hong Kong: 0906) and China Telecommunications Corp. (NYSE: CHA) are expected to be awarded 3G licenses.

— Ray Le Maistre, International News Editor, Light Reading

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