China Unicom faces a severe shortage of space on the radio spectrum for its cellular systems - a key constraint to growth, according to UBS Warburg. The mainland's second-largest telecom carrier plans to raise US$4 billion to US$5 billion in its initial public offering in Hong Kong and New York next month. The brokerage said Unicom's spectrum capacity of its GSM (global system for mobile communications) 900 system was six megahertz, a quarter of China Mobile Communications' 24 MHz. This helped to explain Unicom's move to explore alternative networks such as higher frequency band - GSM 1800 system - and CDMA (code division multiple access) standard. China Mobile is a new mobile-phone network operator, created after Beijing broke up dominant China Telecom into three companies. The other two companies are fixed-line operator China Telecommunications and a soon-to-be-formed satellite company. The brokerage said China Unicom would need more investment outlay for its plan to build a GSM 1800 network because of the system's shorter radius of coverage than GSM 900, requiring more base stations to be built. The brokerage said China Unicom could face fierce competition from providers of personal access system (PAS), a new form of service rapidly gaining popularity in small mainland cities, with about 600,000 subscribers in 50 cities so far. PAS, commonly known as 'Little Smart', is like an extension of the local fixed-line networks, using a 450 MHz or 1.8-1.9 gigahertz band. It is cheaper than cellular phones and is aimed at lower-income consumers. The dominant handset provider is UTStarcom, a United States company which recently listed on Nasdaq. Qualcomm also offers its CDMA technology for the PAS service.