Having emptied its piggybank to extend and upgrade its growing CDMA network (see China Unicom Doles Out Deals), and having come real close to its subscriber target for 2002, China United Telecommunications Corporation, known as the Unicom Group, has set its stall out for 2003.
The carrier, parent company of the New York listed
China Unicom Ltd., was aiming for 7 million CDMA customers by the end of this year, and it currently (at the most recent count) has just short of 6.5 million. Now it wants to fill out that additional capacity it so kindly spent its money on by topping 20 million CDMA subscribers before 2004 is upon us.
That may seem overly ambitious, but then so did the 7 million projected for this year. But while such growth looks like a great opportunity for the CDMA vendor community, the infrastructure windfall is largely over, and the new orders in 2003 are going to be for handsets, according to the latest Wireless Oracle, "The 'X' Factor: Competitive Positioning in the CDMA Infrastructure Market."
"Suppliers eager to develop new markets for CDMA equipment have begun focusing on emerging markets in Japan, China, Indonesia, India, and South America," writes the report's author, research analyst Gabriel Brown. "Carriers in these countries are crucial to the formation of the so-called 'worldwide CDMA belt.' They are signing up the majority of new CDMA subscribers, and they now account for a majority of the infrastructure revenues at all the main suppliers." China Unicom, however, is a special case.
"Unicom, which operates both a GSM and a CDMA network, is cited by all the major CDMA suppliers as a key customer. However, there is a degree of hype surrounding Unicom as an ongoing opportunity," writes Brown. Unicom says it already has capacity for 15 million CDMA subscribers, "suggesting that the short-term opportunity is limited, especially since [Unicom] has just completed a major equipment purchasing round and announced frame contracts."
This means 2003 might be a hot year for orders from Unicom for handset vendors such as LG Electronics Inc., Motorola Inc. (NYSE: MOT), Nokia Corp. (NYSE: NOK), and Samsung Electronics Co. Ltd. (Korea: SEC).
But that's the short term, and more network equipment will eventually be required. "By 2005, Unicom says it intends to have capacity for 70 million CDMA subscribers and between 260 million and 290 million subscribers in total, using CDMA as well as GSM, W-CDMA, and/or TD-SCDMA networks [TD-SCDMA being a home-grown Chinese 3G standard]," finds the report's author.
With Lucent Technologies Inc. (NYSE: LU), Motorola, and Nortel Networks Corp. (NYSE/Toronto: NT) -- and to a lesser extent LM Ericsson (Nasdaq: ERICY) -- having picked up healthy contracts in the last round of awards, there's good reason to believe those firms will be in the running when the next purchase orders are signed.
If they're all still in the CDMA infrastructure business, that is.
— Ray Le Maistre, European Editor, Unstrung
The latest Wireless Oracle report, "The 'X' Factor: Competitive Positioning in the CDMA Infrastructure Market," is available for $400. An annual subscription to the Wireless Oracle is ordinarily $1,250 but is currently available at the special introductory price of $899. For more information, including subscription information and research examples, visit the Wireless Oracle at www.wireless-oracle.com.
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