Utstarcom Inc is to sell its mobile business unit but retain the Little Smart business, the Nasdaq-listed firm said yesterday.

The telecom industry reorganization will boost the already-sluggish Little Smart market as China Telecom is expected to upgrade a national-roaming Little Smart network, industry insiders said.

UTStarcom's Mobile Solutions Business Unit, which consists of wireless solutions like IPCDMA (Internet protocol code division multiple access), will be acquired by the private equity firm OpenGate Capital. The MSBU will be renamed Star Solutions, according to UTStarcom without providing financial terms of the transaction.

"In late 2007, we announced a new strategic focus aimed at maximizing our opportunities in IP-based technologies including IPTV, next generation networks and broadband," Peter Blackmore, UTStarcom's chief operating officer, said in a statement.

UTStarcom China, which is highly dependent on Little Smart business, said the company retains the business and "is closely watching the market demand for the 80 million users."

Little Smart is a city-wide cordless network based on fixed-line phone network, which is operated by China's top fixed-line carriers China Telecom and China Unicom.

As part of the China telecommunications reorganization, China Telecom, the country's biggest Little Smart operator, will upgrade the Little Smart network to a nationwide network, which will allow users to make calls across provinces, industry insiders said.

"China Telecom will probably provide better services for the group of users though the user base is decreasing. It aims to retain the users and make them transfer to the mobile network when it gains it in future (when the reorganization finishes)," said Lu Guoying, CCID Consulting's analyst.

China's Little Smart user base was 79.48 million by the end of April, a 6.3-percent drop compared with the end of 2007, according to the Ministry of the Information Industry.

(Shanghai Daily June 11, 2008)