OK, so that's something of a variation on the finger-snappin' Billy Ocean classic, but it's an appropriate lyric for the telecom sector just now, as companies come to terms with the global slowdown. See our coverage of the bad news, so far:
- Nokia Cuts Device, Networks Outlook
- Hatteras Chops Headcount
- Orckit Hunkers Down, Axes 90 Jobs
- BT Adds to Headcount Cull
- Europe Hit With Big Telecom Jobs Cuts
- Nortel Culls 1,300 Jobs, Loses $3.4B
- Slowdown Crunches Sonus
China's capex lifeline
There's plenty of fixed and wireless network construction in China's pipeline, especially now that the carrier reorganization process and the Olympics are out of the way. (See Mobile, Optical Fuels ZTE's Growth, China Telecom Unveils CDMA Plans, and China Begins $70B Carrier Revamp.)
So how big is the near-term opportunity? One analyst puts the expected total capital expenditure of China's telecom sector at $44 billion during 2009, according to Chinese news site Interfax.
That outlook came just as the Chinese government, which is keen to shore up the national economy, announced a $586 million stimulus package and plans to ease investment and lending, moves that are expected to indirectly benefit the telecom sector. That move boosted confidence in the Chinese market, according to this report from the Associated Press.
However large the combined capex of the Chinese service providers during 2009, it's likely that local vendors Huawei Technologies Co. Ltd. and ZTE Corp. (Shenzhen: 000063; Hong Kong: 0763) will be major beneficiaries.
ZTE announced to the Hong Kong Stock Exchange Monday that it has signed a CDMA infrastructure contract with China Telecom Corp. Ltd. (NYSE: CHA) worth 1.27 billion Renminbi (US$186 million), while local media reports suggest the vendor has just won between 28 percent and 30 percent of a RMB30 billion ($4.4 billion) TD-SCDMA 3G equipment tender from China Mobile Communications Corp. (See China Mobile to Unleash 3G Next Year.)
ZTE's share price closed Monday up nearly 10 percent at HK$13.48.
Other Chinese players fared well in China Mobile's TD-SCDMA contract award process, as Datang Telecom Technology Co. Ltd. , along with partners Alcatel Shanghai Bell Co. Ltd. and optical equipment firm FiberHome Technologies Group , reportedly won between 38 percent and 40 percent of the tender, which involves the construction of 23,000 base stations in 28 cities.
TD Tech Ltd. , a TD-SCDMA joint venture between Nokia Networks and Huawei, reportedly won about 25 percent of the tender, while Ericsson AB (Nasdaq: ERIC) and state-owned Potevio Co. Ltd. won single-digit shares.
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