The Ministry of Industry and Information Technology yesterday required telecom carriers to issue 3G licenses to TD, WCDMA, and CDMA 2000 telecom networks operators within this year.
China's telecom industry has slipped into recession as a result of the global financial crisis. The ministry originally planned to issue three 3G licenses to China Mobile, China Telecom and China Unicom in this September, but it put it off later to the first half of 2009.

As the Chinese government lately came up with a big economic stimulus plan, the ministry just hoped to issue the 3G licenses in advance to spur telecom infrastructure construction.

Chang Xiaobing, chairman of China Unicom, says that the company will invest as much as CNY 200 billion in fixed assets in the coming two or three years after it gets the 3G license.

China Mobile says that it would pour CNY 30 billion in building up TD-SCDMA networks. And China Telecom will spend CNY 80 billion to set up CDMA 2000 networks.

As a result of the substantial reduction of fixed line telephone subscribers, China Telecom's net profits were down 8.2% to CNY 12.63 billion in the first half of 2008.

Wang Xiaochu, president of the telecom carrier, says that China Telecom is likely to be the first to launch 3G services. And it will invest as much as CNY 80 billion in 3G in the coming three years.

The company saw a turnover of 600,000 fixed line telephone subscribers this July, an increase of 3.4% from the previous month, reducing the total number to 214.29 million.

The number of its broadband Internet users soared 810,000 in July, pushing the total number to 40.76 million. However, the growth rate slowed down 9% in comparison with June.

The telecom carrier attributed the reduction of fixed line telephone users mainly to the proliferation of cell phones as mobile telecom carriers pressed down endlessly their service charges.

Latest survey of Credit Lyonnais Securities indicates that the fast growth of the broadband Internet access service of China Telecom is likely to make up the losses made by fixed line telephone sector.

However, China Telecom will be facing great pressure in CDMA expansion. And its mobile telecom service will have to be confronted with pricing wars.

Credit Lyonnais Securities believes that China Telecom will see sustainable growth in the first half of 2008, with net profits increasing 4.5% to CNY 14.09 billion. Another principal risk facing China Telecom is the decline of average revenue per user of its broadband service.

Source:SinoCast