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ZTE Snatches Unicom CDMA Deal
Telecommunications equipment provider Zhongxing, or ZTE, became the biggest winner among domestic firms competing for code division multiple access (CDMA) network construction contracts from China Unicom.
China Unicom, the country's second largest mobile telecom operator, last Tuesday signed deals with 10 equipment firms, both foreign and domestic, to help build its new advanced mobile service network.
The new network will be China Unicom's second mobile network after the present global system for mobile communication, or GSM, network.
Compared with GSM systems, CDMA provides higher voice transmission quality and less radiation. It is also expected to smoothen the transition from the current second generation of mobile technology to the third generation, commonly referred to as 3G technology.
According to a statement from China Unicom, its CDMA network will attract 15.15 million users this year and 40 million by 2005.
The contracts were worth a combined 12.1 billion yuan (US$1.46 billion).
Massive international telecoms equipment makers Lucent, Motorola, Ericsson and Nortel won large contracts via their local joint ventures. Among the six successful domestic bidders, ZTE was the biggest winner, capturing a contract, of an unreleased amount, to build CDMA networks in 10 provinces supporting a total of 1.1 million users.
Unlike other domestic firms that took part in the bid with switching systems only, which is only one-third of the total network, ZTE provides a complete set of its own patent-owned CDMA equipments for the complete network including base stations and mobile terminals, according to a ZTE spokeswoman.
"This is a major breakthrough for China's telecoms equipment manufacturers," said Wang Yingpei, president of Unicom Horizon, the CDMA branch of China Unicom. "Domestic equipment manufacturers proved they were able to compete with foreign firms."
Although China Unicom said before the bid that it would consider domestic companies first, Wang insisted the bid was operated on a fair, equal and transparent basis.
He said the success of ZTE and other domestic firms is a milestone for the country's telecoms industry because it challenges dominance of the equipment market by foreign brands.
China is the second largest mobile telecoms market in the world with 100 million mobile phone users.
Despite rapid growth of the market in recent years, domestic equipment manufacturers lagged behind during the GSM age, giving way to the likes of Lucent, Ericsson and other foreign telecoms equipment producers.
Besides ZTE, five other Chinese firms -- Datang, Jinpeng, Eastcom, Huawei and Shanghai Bell -- also won contracts to work with the four foreign joint ventures.
Among the joint ventures, Qingdao Lucent and Hangzhou Motorola were each awarded contracts worth roughly US$400 million. Guangdong Nortel and Nanjing Ericsson signed contracts worth US$275 million and US$200 respectively.
ZTE is the only domestic company not working with a foreign partner.
With the deployment of its CDMA network, China Unicom will be well-positioned for rapid expansion of its wireless services in one of the world's fastest growing mobile telecoms markets, said Jim Brewington, president of Lucent's wireless networks group.
"This is a major market entry for Lucent in China," said Brewington, who seemed confident his company would gain from future network expansion.
China Unicom, founded in 1994, is the only service provider licensed in China to offer the full complement of telecoms services -- fixed lines, IP phones, domestic toll calls, international calls, and wireless and data networks.
On June 21, 2000, the company raised US$6.3 billion in funds through an IPO (initial public offering) and became one of the largest publicly traded non-Japanese companies in Asia.
As of March 2001, China Unicom's GSM network covered approximately 25 million subscribers in more than 250 cities.
The company is looking to capture 35 per cent of the domestic mobile market within the next five years
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