The People's Insurance Company (Group) of China, or PICC, has agreed to invest 1.5 billion yuan (US$202 million) in Datang Mobile, the major developer of China's 3G mobile phone technology, Datang's parent firm said yesterday.

 

The investment will finance the development of the long-awaited home-grown 3G technology TD-SCDMA (time division synchronous code division multiple access), and therefore hasten 3G licenses in China, industry insiders said.

 

This is the biggest single investment by a Chinese insurance firm in telecommunications, Datang Telecom Technology and Industry Group said yesterday.

 

"It is an agreement between two giants and it will boost the development of the Chinese telecommunications industry and lead to further innovation," Wu Yan, PICC's president, said.

 

Both sides declined to reveal what percentage of stake PICC will take in Datang Mobile. The company is developing the new mobile standard, from chip design to wireless base stations.

 

"TD-SCDMA is the last straw for Datang Group, otherwise it is over," said Sandy Shen, a Gartner analyst based in Shanghai. "It is an uncertain risk for strategic investors as it will probably take a long time for them to get returns."

 

China hasn't released the timetable for issuing licenses and it will also take one or two years for a new 3G network to make a profit, said Shen.

 

Datang Mobile, an unlisted subsidiary of Datang Group, generated revenue of 128 million yuan (US$17.29 million) in 2006 and lost 113 million yuan last year, compared with a loss of 26.74 million yuan in 2005. China Academy of Telecommunication Technology (CATT) is selling a 13-percent stake in Datang Mobile.

 

(Shanghai Daily December 12, 2007)