WCA March 2009

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30 Wire & Cable ASIA – March/April 2009
The high morale of Huawei and ✆ ✆
ZTE owes much to the Chinese
government, which has said
that telecom operators in China
will spend about $41 billion on
next-generation (3G) mobile net-
works over the next two years. In
addition, as reported from Beijing
by Reuters correspondent Kirby
Chien, China will support the
development of core microchips,
terminals, and testing equipment
to expand network coverage.
The information was attributed to
Minister of Industry and Information
Technology Li Yizhong. (“China
Says $41 Billion to Be Spent on
3G,” 19 th December)
Mr Li had already said that at least
$29.2 billion would be spent on
3G in 2009 alone, with long-awaited
licences to be awarded early in the
year. Reuters noted that Beijing
is developing its own TD-SCDMA
3G standard to promote domestic
industries and technology “and to
avoid the hefty royalties demanded
by foreign companies that own
the rights to the technologies” that
are in common use worldwide:
WCDMA and CDMA 2000. Licences
for the new technology, which
enables faster data downloads,
were expected to go to China
Mobile, China Telecom, and China
Unicom.
In other news of China Unicom, to ✆ ✆
expand its presence in southern
China the mobile operator has
announced plans to acquire the
fixed-line business of its parent
China Netcom for $940 million.
On 18 th December, Unicom said it
would take over Netcom’s fixed-line
and broadband Internet business
across 21 provinces in the south.
In addition to its own local access
telephone business in Tianjin,
Unicom will also acquire Netcom’s
backbone transmission assets in
northern China and a 100% equity
interest in Unicom Xingye, CITC,
and New Guoxin. These moves are
expected to boost the number of
Unicom fixed-line and broadband
subscribers from 130 million to
over 140 million.
Damage to three major undersea ✆
✆
cables seriously affected more
than half of Internet and phone
service across Europe, the Middle
East, and Asia on 19th December,
with India (82% disruption),
Qatar (73%), and the United Arab
Emirates (68%) the worst affected,
according to France Télécom.
The French operator also said
that Saudi Arabia, Jordan, and
Egypt suffered disruption to about
50% of their service. Initial notice
of the breakdown, on the France
Télécom website, placed the locus
of the cuts “in the Mediterranean
between Sicily and Tunisia, on
sections linking Sicily to Egypt,”
but said the cause was unclear.
Resumption of full service was not
expected before the New Year.
As reported by Dylan Bowman
of arabianbusiness.com (20th
December), the newswire AFP
quoted France Télécom as saying
the cuts were less likely to be due
to sabotage than to an encounter
with trawlers’ nets.
The cables – two of which seemed
to have been severed, one partially
cut – are jointly owned by several
dozen countries. One cable is
25,000 miles long and links 33
countries; another, 12,000 miles
long, serves 14 states.
Experts from France Télécom
Marine arrived at the site of the
damage aboard a cable ship and
began repairs on 21st December,
said a company spokesman. The
breakdown was the first such
major incident since January 2008,
when five cables in the Middle
East and Europe were cut, causing
severe Internet disruption across
the Middle East and Asia.
Even as some major Western telecom equipment manufacturers prepare for a
reduction in carrier spending and falling sales this year, there are indications
that their Chinese rivals Huawei Technologies Co Ltd and ZTE Corp believe
themselves to be on course for higher revenues. As reported in Light Reading,
Alcatel-Lucent expects the fixed and mobile infrastructure sector, including
associated services, to shrink in value by between 8% and 12% during the
year, while Nokia Siemens sees the market shrinking by 5% or more. In
contrast, a bullish Huawei expects to hit its 2008 target of $23 billion in contract
sales, in which a purchase is not recorded until a fixed number of payments
have been made by the buyer. In 2007, Huawei reported contract sales of
$16 billion but audited revenues of only $12.56 billion.
Even so, the results made the Shenzhen-based company the number 5
telecom equipment vendor in the world. (“Huawei, ZTE Predict 2009 Growth,”
19 th December). If Huawei manages to reprise the revenues-to-contract sales
ratio it achieved in 2007 international news editor of Light Reading, Ray Le
Maistre, projects 2008 revenues of more than $17 billion. For 2009, Huawei
looks for “steady growth from both the fixed and mobile field, especially with
the development in the mobile broadband space,” a market in which Huawei
is regarded as strong competition to the large European vendors.
For its part, China’s largest listed telecom equipment provider ZTE, also
based in Shenzhen, exudes a similar confidence. Light Reading observed
that, while this “fierce Huawei rival” had not yet issued an official 2009
financial outlook, company representatives talked of sales growth in 2009.
“Like Huawei,” Mr Le Maistre wrote, “ZTE is well positioned, as a local
supplier, to continue to win new deals from China’s carriers for the building
and expansion of networks. [It] is also active in India.”
Of course, projections butter no parsnips but, like Huawei, ZTE has been
busy building business in emerging markets in Asia/Pacific, Africa, and
Latin America, and is keen to win deals in North America. To that end,
in mid-December it announced a contract for CDMA infrastructure and
handsets from US-based mobile startup Smart PCS, which serves the
southern states of Georgia and Tennessee. And, Mr Le Maistre noted, ZTE
is also “making noises” about next-generation fibre access technology
developments.
Chinese equipment makers see a sunnier 2009 than
their counterparts in the West
Elsewhere in telecom . . .