TCL Communication Technology Holdings' top brass remained bullish about the company's prospects yesterday despite concerns about the mainland handset market. Bosses at the struggling subsidiary of electronics giant TCL International said the downturn in the mainland market was temporary, and added that its partnership with French mobile phone maker Alcatel would help to strengthen its market share. 'Undoubtedly we will become China's largest indigenous handset manufacturer,' said TCL Communication chairman Tomson Li Dongsheng at the announcement of the company's initial public offering on Hong Kong's main board later this month. Plans to list via a global public offering were abandoned earlier this year on the advice of the firm's underwriters. Sales of TCL Communication's handsets declined 8 per cent year on year to 4.4 million in the six months to June, while the average unit price fell to 815 yuan from 1,089 yuan over the same period. The company said the downturn in the mainland market had affected sales after four years of rapid growth since 1999. TCL Communication's chief operating officer George Guo Aiping said the company's average sales price was affected by the drop in prices for monochrome phones. Consumer migration to phones with colour screens and built-in cameras would improve the company's position in coming months, he added. Mr Li also said that the market for mobile phones in the mainland still had substantial room for growth. 'The Chinese market will continue to grow steadily - penetration is still very low at around 20 per cent,' he said. The company expects a penetration of 40 per cent and more than 500 million subscribers by 2008. Mr Li said its joint venture company with Alcatel - TCL-Alcatel Mobile Phones - was driven by a need to add new features to compete with rival manufacturers. Alcatel's GSM patents were passed to the joint venture, in addition to 600 R&D professionals. TCL Communication would absorb production of Alcatel handsets within 12-18 months, Mr Li said, noting that the French firm's practice of outsourcing manufacturing had contributed to previous losses. But while the company stressed its strengths in the long term, chief financial officer Habibullah Abdul Rahman said the figures would not improve immediately, as '2004 will be a year of challenges'.