China Mobile Sees GPRS Launch in Second Half Year

China Mobile (Hong Kong) will mostly use its own cash to fund US$16.3 billion in capital expenditure over the next three years and a large portion will be for GPRS networks, a senior official said recently.

The 2.5 generation technology was expected to be launched in the second half of this year, said Li Zhen Qun, vice chairman and COO of China Mobile (Hong Kong), the listed unit of China Mobile Communications Corp, China's largest cellular operator.

GPRS, or general packet radio switching, is a newer technology laid on top of the second generation global system for mobile communications (GSM) that China Mobile now uses.

The telecoms giant had been expected to launch GPRS trials in 2000, but they were delayed to this year.

"We expected to launch GPRS in the first quarter (of 2001) in Guangdong, but it was postponed due to technical reasons," Li told an investment seminar in Shanghai.

"But in the second half of 2001, GPRS will be put into operation," he said.

Li said China Mobile (Hong Kong) would spend US$5.5 billion this year in capital expenditure and US$5.4 billion each year in 2002 and 2003.

Most of the increase in capital expenditure would be funded internally and go towards GPRS, business expansion and installing backbone infrastructure, he said.

"We shall rely on cash flow through our operations each year," he said. "It is mainly internal funding."

Selective acquisitions

The listed firm is looking to buy 18 subsidiaries from its parent -- mainly Chinese provincial telecom providers that would add 21 million subscribers to its 52 million subscriber base, Li said.

"We will be more selective in acquisitions in the future and will find the best financial instrument to achieve our overall strategy," he said.

Some analysts have expressed concern that the acquisition of these networks, mainly in central and western China, would hit China Mobile's profit margin.

But Li said: "Not all 18 subsidiaries are performing badly. Some in central China are quite good. We will seek opportunities at the appropriate time and purchase them at a reasonable price."

China Mobile spent US$3.5 billion on capital expenditure in 2000, lower than an expected US$5 billion, mainly because of cheaper equipment prices and the postponement of the 2.5 generation service rollout.

"Through the strength of our negotiations, we achieved about a 35 percent decrease in the price of equipment," Li said.

Li said China Mobile (Hong Kong) was interested in listing on China's domestic share market via China Depositary Shares (CDS) but the deal was still in early stages and needs more discussion with regulators.

China Mobile was also considering new yuan-denominated bonds to refinance syndicated loans that mature this year, Li said.










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