China Unicom Spending Heavily on GSM

Updated:2008/4/10 11:31

On the eve of mass application of 3G networks, China Unicom, the second largest mobile telecom carrier in this country, is spending heavily on GSM networks.

Previously, China Unicom had been focusing on construction of CDMA networks, while CDMA business has been its mainstream. Its CDMA sales soared 30% in the first half of 2007, compared with merely 5.1% increase of its total revenue.

Chang Xiaobing, chairman of China Unicom, lately noted that it will not cut investment in networks this year due to the upcoming telecom regroup and it is slated to pour as much as CNY 20 billion into GSM network upgrade.

The carrier upgraded its GSM networks in major cities around the country to GPRS with total investment of CNY 20 billion last May. Meanwhile, it officially kicked off three GPRS services: WAP, multimedia short message, and JAVA-based value- added data communications.

"Upgrading its GSM network is significant for future China Unicom''s 3G users," says Zhang Peng, an analyst from E- capital.

After upgrading GSM networks, the highest priority of China Unicom is to strengthen its value-added services in a bid to increase its sales.

China Unicom, which started separate operations of its GSM and CDMA businesses from the first half of 2007, now has achieved a turnaround in its overall operations, particularly curbed the decline in the CDMA business, noted Chang Xiaobing, board chairman of the mobile telecom operator.

Its mobile phone subscribers amounted to 162.491 million as of December 31, 2007, including 120.564 million GSM users and 41.927 million CDMA users, rising 12.7% and 12.4% from 2006.

However, the average revenue per user (ARPU) from the GSM and CDMA businesses slid to CNY 46 and CNY 58.1 from CNY 49.2 and CNY 65.8 in the previous year due to the decline in average mobile tariff per minute, explained Shang Bing, president of China Unicom.

Capital expenditures in the year totaled CNY 25.72 billion, namely, CNY 16.49 billion for GSM network construction, CNY 720 million for the long-distance, data, and Internet businesses, CNY 4.25 billion for basic networks, and CNY 4.26 billion for others.

The figure for this year is expected to increase 20% to CNY 30.95 billion, including CNY 18.7 billion for GSM networks, CNY 4.8 billion for basic networks, and CNY 1.1 billion for the long-distance, data, and Internet businesses. Expenditures for the GSM networks will account for about 60.4% of the total.

Source:SinoCast China