Huawei Technologies [HWT.UL] China's largest telecom gear maker, said on Monday it expected a huge sales boost over the next 19 months from Wimax equipment sales overseas and the rollout of third generation (3G) networks domestically.

The technologically nimble company was poised to profit from China's own TD-SCDMA, a 3G standard that China Mobile <0941.HK>, the world's largest wireless carrier, has been picked to develop and nurture, Zhao Ming, Huawei's head of CDMA and Wimax operations, told Reuters on the sidelines of a conference.

Wimax began to take off last year and Huawei expects equipment sales of the wireless broadband technology to double next year to $1 billion, said Zhao.

"This year it will be around $500 million ... and next year it should be around $1 billion," said Zhao, who reckons sales will continue to grow rapidly in emerging markets where fixed line networks are poorly developed.
Wimax, which offers blanket coverage of a city or small geographic area, is best suited for emerging markets that don't have a developed fixed-line network and also rural areas in developed markets where wired broadband service is spotty, say analysts.

The company only had about $150 million in Wimax equipment sales in 2007, but falling prices have put the maturing technology within the grasp of millions of users, said Zhao.

"You can now find terminal prices of under $100," he said.

The price for such hardware -- which allows broadband connections in areas that previously had little or no telephony services -- was about $1,000 per customer four years ago and as much as $200-$250 last year.

"The growth will come from Asia, Africa and the Middle East," he said. The technology, however, has limited uses in China, which boasts the world's largest mobile market with over 600 million subscribers.

The Wimax Forum, the main industry group, estimated that about 3.6 million people worldwide used Wimax in 2007, but it forecasts that could grow to 100 million by 2012.

TECHNOLOGICALLY AGNOSTIC

Huawei became the world's third-largest mobile network gear maker in the first quarter, roughly doubling its market share from a year ago to 15 percent and passing Alcatel-Lucent , according to researcher Dell'Oro. [ID:nLL338473]
The firm expects its market share of CDMA equipment sales in China to rise from the current 38.9 percent, but the pace will slow as CDMA competes against China Unicom <0762.HK> -- which operates another mature standard, WCDMA -- and China Mobile, which has the broadest mobile network, said Zhao.

"The 38.9 percent can grow, but it won't be big," he said, noting that Huawei's market share of CDMA equipment as late as 2008 was only around 3 percent.

In the past 18 months, the company has deployed 62,000 CDMA base stations for China Telecom <0728.HK>, the country's largest fixed-line operator, but a laggard in the mobile sector.

Beijing has targeted spending of $58.5 billion in 3G mobile network construction through 2011 after handing out long-delayed 3G licences earlier this year.

As part of that network build-out, the company also expects to get more than 25 percent of China Mobile's current round of bidding for 3G equipment.

"It should be better than 25 percent," he said. The company grabbed 12 percent of China Mobile's first-round bidding for TD-SCDMA equipment and 25 percent in the second.

Dell'Oro said the global telecom equipment market contracted 9 percent in the first quarter of 2009 from a year ago, but China 3G tenders will likely prevent the market from falling further.

The telecom market has seen cut-throat competition for new business during the past few years, driven by Asian vendors such as Huawei and cross-town rival ZTE <0763.HK>, and the outlook remains grim.

Nortel , once the largest North American maker of telecommunications gear, filed for bankruptcy protection in the United States and Canada earlier this year.