Fresh capital also to help pay for trials of homegrown 3G system, says report Datang Telecom Technology and Industry Group (Datang Group), a developer of the mainland's homegrown 3G technology TD-SCDMA, is expected to receive about four billion yuan from the government to pave the way for a corporate restructuring, a newspaper reported. The 21st Century Business Herald said yesterday the State-owned Assets Supervision and Administration Commission would be responsible for the cash injection. Datang Group could not be reached for comment. Last month, mainland media reported that China Mobile Communications Corp would inject three billion yuan into Datang Group, which both companies denied. Datang Group is held by the state-owned China Academy Telecommunication Technology. It has two subsidiaries, including Shanghai-listed Datang Telecom, which focuses on telecommunications solutions and system integration business. Datang Mobile is the privately owned arm that is developing the TD-SCDMA network, technology and other related businesses. Datang Telecom yesterday said it was aware of the report about the capital injection but had nothing to disclose. Its operations remained normal, it said. The government would like to carry out a corporate restructuring to reduce Datang Group's debt through the capital injection, the Herald said. The fresh capital would also be enough for carrying out commercial trials of TD-SCDMA services led by China Mobile Communications in 10 cities later this year, it said. Datang Group licenses TD-SCDMA patent to various telecommunications vendors such as domestic firms ZTE Corp and Huawei Technologies as well as foreign players such as Nokia and Ericsson. 'Datang Group may not get a normal royalty or licensing fees [directly] from TD-SCDMA trials and will see a lack of cash flow until the technology goes commercial,' said Wong Chi-man, an analyst at Everbright Securities. However, the company might generate cash by charging royalty or patent fees on sales of TD-SCDMA equipment, Mr Wong said. Citigroup estimated earlier this month that the first phase of TD-SCDMA's network capital expenditure was eight billion yuan for a capacity to serve eight million users.
