State Council approves issuance of 3G licences

PUBLISHED : Thursday, 01 January, 2009, 12:00am
UPDATED : Thursday, 01 January, 2009, 12:00am

The State Council yesterday gave the go signal for the Ministry of Industry and Information Technology to issue long-awaited licences for third-generation high-speed networks, paving the way for substantial telecommunications capital expenditure in coming years.

The launch of 3G services comes at a time when the government is banking on fiscal spending to boost domestic consumption and the flagging economy.

The council did not say when the licences would be issued by the ministry, but the industry minister has said it would happen early this year. 'The conditions for handing out the licences are mature, since the restructuring of the telecommunications industry is almost finished,' the council said at an executive meeting yesterday.

Issuing 3G licences would significantly boost domestic consumption and optimise the structure of the mainland's telecommunications sector, the council said, and would also help develop the mainland's homegrown TD-SCDMA mobile technology platform.

Minister for Industry and Information Technology Li Yizhong earlier predicted the mainland's three state-owned mobile operators - China Mobile Communications Corp, China Telecom Group and China Unicom Group - would invest a total of 280 billion yuan (HK$317.49 billion) this year and next on 3G mobile networks.

As part of the industry restructuring announced earlier, China Mobile would be awarded a licence for the TD-SCDMA network, Unicom a licence for Europe's WCDMA standard and China Telecom for North America's CDMA2000, a hybrid technology.

China Mobile shares closed up 2.1 per cent at HK$77.80 yesterday. China Telecom rose 2.12 per cent to HK$2.89 and Unicom closed up 1.2 per cent at HK$9.30.

The government has estimated total telecommunications revenue to grow 6 per cent this year, below last year's 8 per cent growth. Service volume is expected to grow 15 per cent.

Analysts said mainland equipment vendors such as ZTE Corp and Huawei Technologies would benefit most from the huge investments the three mobile operators are going to make on their networks, while foreign vendors would face a shrinking market share.

China Mobile already provides commercial trials of TD-SCDMA technology in 10 cities, including Beijing, Guangzhou, Shanghai and Shenzhen. It is building networks in 28 more cities, aiming to introduce services no later than June.