November 19, 2009

Chinese 3G Spending Surges

Massive spending on 3G networks by China’s three mobile carriers will cause spending on wireless infrastructure equipment in the nation to surge by 27.7 percent to reach $6.3 billion in 2009, marking a peak for expenditures, according to iSuppli Corp.

“After a strong increase in purchases of wireless communications gear in China in 2009, 2010 will bring a 2.4 percent decline to $6.1 billion as China Telecom completes purchasing for its massive rollout of 3G cell-phone base-station transceivers,” said Will Kong, analyst for China Research at iSuppli. “Revenue will continue to decline in the following years as the carriers move beyond the initial deployment stage of their 3G services.”

iSuppli’s forecasts that the infrastructure investment by China Telecom, China Unicom and China Mobile will result in the number of 3G subscribers in the nation rising to more than 100 million in 2013, up from 338,000 in 2008 (a 300-fold increase).
 
The nation’s three mobile carriers completed the first phase of their 3G network deployments before August of this year. The proliferation of CDMA-based 3G services is progressing rapidly. China Telecom’s CDMA2000 3G network now covers 342 cities and is expected to expand to 500 cities by the end of this year, while China Unicom has conducted two phases of WCDMA network deployment to cover 285 cities.

In comparison, the process of commercialization of the alternative TD-SCDMA 3G technology is slower than expected. China Mobile’s TD-SCDMA network covered just 38 cities before August. However, an additional deployment is set to expand the service to a total of 238 cities by the end of 2009. In terms of network deployment, China Telecom is the fastest mover in the 3G area and is expected to initiate a price war to attract more subscribers.