China's announcement that it will remain "technology neutral" on 3G standards and allow domestic telecom operators to choose themselves should not be taken too literally, with dominant player China Mobile likely to be given a license for the home grown TD-SCDMA standard, CLSA said.

The broker said it would not attach too much importance to the Vice Minister of industry and Informatization's comment on being 3G technology neutral, as the statement is subject to a number of interpretations.

The possible outcomes under such a policy stance include licensing three different 3G standards - WCDMA, CDMA2000, TD-SCDMA - giving China three different 3G platforms.

It could also mean that the ministry has recommended China Mobile take a TD-SCDMA license, the broker said, adding that this recommendation would be much the same way as the government "encouraged" China Mobile to acquire Railcom.

There is also a slim chance that China Mobile could get both TD-SCDMA and WCDMA licenses, despite rumors that the operator had already lobbied for a WCDMA license and was denied.

"The question remains whether China Mobile will also get a WCDMA license, but this is unlikely in the foreseeable future," CLSA said.

"Given China Mobile's TD-SCDMA burden, we believe asymmetric regulations... are unlikely," it added.

The broker said it maintains its "buy" recommendation on China Mobile and "outperform" on China Unicom.

It reiterated its "sell" recommendation on China Telecom.

In mid-afternoon trading, China Mobile was down 1.90 hkd, or 1.8 pct at 103.3 hkd.

China Unicom was up 0.10 hkd, or 0.636 pct, at 15.82 hkd while China Telecom was 0.09 hkd lower, or 2.11 pct, at 4.17 hkd.

(1 usd = 7.8 hkd)

Source:XFN-ASIA