SCMP: Nortel/GSM/China
Thursday, April 26, 2001
Nortel wins China GSM deals
REUTERS
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Canada's Nortel Networks said on Thursday it clinched deals worth US$136 million to expand GSM dual-band networks in China, bringing its total contracts signed in the country this year to nearly US$500 million.
Despite signs of a telecoms spending slowdown and increasing competition, Nortel was confident it would perform better than rivals Lucent and Cisco, as well as domestic firms, Nortel's Asia-Pacific president Masood Tariq said.
China Mobile, the largest wireless carrier in China, awarded Nortel new contracts estimated at more than US$105 million for major expansions of GSM (Global System for Mobile Communications) digital cellular networks in the provinces of Hebei, Anhui and Guizhou, Nortel said.
The Hebei contract, estimated at US$83 million, would allow Nortel to implement a seventh GSM network expansion in the northern province, increasing its network subscriber capacity by one million to five million, it said.
Nortel also said it would raise network capacity in the eastern province of Anhui by 140,000 subscribers to 300,000 and boost capacity in the southeastern province of Guizhou by 330,000 to 930,000 subscribers.
More Chinese go mobile
All three expanded networks of China Mobile, which has a listed unit in Hong Kong, were scheduled to enter commercial service by September, Nortel said.
Ningbo Unicom had also given Nortel a contract worth more than US$31 million to expand its existing GSM 900/1800 dual band digital cellular network, Mr Masood said.
Operations were expected to begin by October and would increase Unicom's network capacity in the east coast city of Ningbo by 350,000 subscribers to 910,000, he said.
Earlier this year, Nortel signed a string of GSM expansion deals, including a US$130 million contract with China Mobile and a US$30 million contract with Xinjiang Mobile Communications.
In the past few months, the top supplier of fibre-optic network gear also sealed contracts worth more than US$140 million with China Telecom to provide optical networking equipment.
With China adding about 100,000 mobile subscribers a day and a million Internet users a month, networks face congestion and are starved for more bandwidth, Mr Masood said.
GSM dominates China's wireless sector despite challenges from the rival CDMA (Code Division Multiple Access) technology.
Although some analysts say there will be 10 to 14 million CDMA users in a total 131 million wireless users by the end of this year, its proponents say the technology has more potential than GSM for handling wider bandwidths.
"As you have a lot GSM users ... you will get capacity constraint from a spectrum point of view," Mr Masood said.
"CDMA technology has a lot of advantages on spectrum utilisation, on high density area the ability to go on longer distances. They will both will exist."
Mr Masood also shrugged off worries of challengers, including home-grown firms like Huawei Technologies and Shenzhen-listed Zhongxing Telecom, grabbing a piece of the lucrative telecoms pie.
"Local vendors are doing very well in their areas of access, in the areas of switching and some areas of low speed access," Mr Masood said.
"Nortel Networks spends quite extensively in research and development and I'm not sure some of the local vendors can spend that because it is just a huge investment," he said.
On Wednesday, Nortel shares closed in Toronto at C$23.58, down C$0.41 and C$0.36 lower at C$15.16 in New York.
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