German electronics group Siemens has signed a US$70 million deal to double the capacity of Shanghai's cellular phone network. A Siemens spokesman in Beijing said the work would be carried out by the end of 1997. 'It will expand network capacity from 425,000 to 850,000 subscribers,' she said. The city has a population estimated at more than 15 million. The deal, between Shanghai's Posts and Telecommunication's administration and a majority-owned Siemens joint venture, Shanghai Mobile Communications, underlines the massive growth in China's cellular market. By the middle of last year there were more than seven million subscribers. By 2000 that will have spiralled to a projected 25 million, according to the government's economic plans. Beijing is keen on mobile networks because they can be built much more quickly than land line infrastructure. This latest contract covers equipment and manpower costs only. It remains illegal in China for foreign companies either to operate or take an equity stake in a telecommunications firm. The extension of the Shanghai network will focus mainly on existing high-density mobile use districts in the city such as office buildings. It will also improve coverage in areas with difficulty in telecommunications such as the downtown area and the Pudong business district. Over the past two years, the Shanghai authorities have expanded the mobile telecommunications network three times. Siemens was involved in two previous expansion contracts. The network will continue to use the digital GSM (Global system for mobile telecommunications) technology, which was introduced in Shanghai by Siemens two years ago.