China United Communications Co., the country's second largest mobile telecom operator, will invite telecom equipment suppliers from home and abroad to its third public bid for the CDMA project half-year ahead of its schedule, its general manager of marketing department, confirmed last week.
The bid, expected to total 10 billion yuan (US$1.2 billion), is for the third-phase construction of the CDMA network and was planned around the end of this year. It's expected to be the largest purchase deal this year in China's telecom sector.
At the previous two bids, China Unicom signed deals reaching 21 billion yuan (US$2.54 billion) and 16 billion yuan (US$1.93 billion) respectively.
In the following 10 years, the market value of China Unicom's CDMA sector is expected to reach 500 million yuan (US$60.4 million), with 100 billion yuan (US$12.08 million) to be used for purchase, according to market analysts.
For the third-phase construction, investment in the first stage in Beijing alone will reach 2 billion yuan (US$0.24 billion), according to Jiang Peihua, general manager of China Unicom's Beijing branch.
At this stage, it aims to expand its users to 800,000-12 million within the year and enlarge the coverage area of the CDMA network from the existing 90 percent to 95 percent of the downtown densely polluted area.
At the second stage, the company plans to cover its CDMA network to 1,000 office buildings in the capital and parts of the subway. Investment for this stage is still not clear.
To finance for the huge purchase deal, China Unicom's Hong Kong-listed arm China Unicom Ltd reportedly will borrow HK$5.5-7.8 billion (US$705 million to US$1 billion) banking loans and its domestically traded unit on the A-share market is planning to issue 10-billion-yuan corporate bonds.
The huge deal, attracting telecom equipment suppliers from across the world, will intensify the already fierce competition in the country's telecom equipment industry, market analysts said.
And domestic suppliers will feel the pinch from overseas peers as nearly all of the Chinese firms, except ZTE Corp, lacks the independent research and development capability in CDMA. They are handling CDMA technology with overseas partners.
In China Unicom's previous second bid of last year, ZTE won the bid for 15 percent of the total deal, while the rest was shared by overseas suppliers such as Motorola and Ericsson.
ZTE seems confident about this bid. According to Li Shuo with marketing section of Beijing Unicom, the deal they win this time will definitely surpass the previous event.
So far, China Unicom has confirmed Motorola and Ericsson have won deals of US$80 million and US$57 million respectively at the third bid for the networks in Jiangsu and Liaoning provinces.
(Eastday.com July 18, 2003)
