China's 3G Move to Trigger Spending
According to various reports from China, including this one from Bloomberg, Li Yizhong, China's minister for Industry and Information Technology, told a news conference that licenses would be awarded either this month or in early January, and that operators were expected to spend at least 200 billion Renminbi (US$29.2 billion) in 3G-related capital expenditure next year.
A loose timetable for 3G license awards was announced earlier this year as part of the overhaul of China's telecom services sector, and the country's three major carriers have been gearing up for next-generation wireless. (See China to Get 3G – At Last!, Unicom Plans Capex Blowout, China Mobile Preps LTE Network, China Mobile to Unleash 3G Next Year, and Good CDMA News.)
China Mobile Ltd. (NYSE: CHL) is set to get a license to operate a network based on China's home-developed 3G standard, TD-SCDMA. China Telecom Corp. Ltd. (NYSE: CHA) will be awarded a CDMA 2000 license, while China Unicom Ltd. (NYSE: CHU) will get a WCDMA license.
China's 3G network rollouts will help boost the global telecom sector at a time when the worldwide market is set to shrink, making the contracts set to be handed out by China's carrier trio even more precious to the equipment manufacturers. (See Sizing Up AT&T's Cuts (and Chops) , Capex Watch: Telecom Italia Plans Cuts, Capex Watch: Expect Shrinkage in 2009, and Emerging Markets Offer Capex Hope.)
Local vendors Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) are expected to benefit the most from the new spending rounds, while the likes of Alcatel-Lucent (NYSE: ALU), Ericsson AB (Nasdaq: ERIC), and Nokia Networks are also expected to pick up deals.
— Ray Le Maistre, International News Editor, Light Reading