UTStarcom Inc, a global leader in IP-based, end-to-end networking solutions and services, has announced the signing of an infrastructure contract of around US$100 million with China Telecom Corp to expand its IP-based PAS (Personal Access System) networks.

The expansion will be carried out in Jiangsu, Zhejiang, Hubei, Guangdong, Fujian and Yunnan provinces, Shanghai Municipality and the Guangxi Zhuang Autonomous Region.

"PAS continues to be the best technology satisfying market demand for wireless telecommunications services in China and a key business driver for fixed-line operators," said Simon Le, senior vice-president of sales at UTStarcom China.

According to the Ministry of Information Industry (MII), PAS subscribers in China grew by 12.5 per cent in the first five months of this year, with the number of subscribers surpassing 77 million by the end of May.

In the same period, PAS subscribers accounted for around 60 per cent of all fixed-line subscriber additions.

Le said UTStarcom continues to be the leader in the PAS handset market in China, with more than 60 per cent of the market share in the first half of this year.

UTStarcom introduced 21 new PAS handset models to the market last year, including the world's first detachable PIM (personal identity module) card handset, and shipped more than 14 million PAS handsets within China.

Analysts believe that PAS handsets still have a lot of potential, especially in rural areas.

"There is still market potential for the development of PAS, although the growth rate will gradually slow down," said Yang Qing, deputy director of the TeleInfo Institute of the China Academy of Telecoms Research under the MII.

"China will soon roll out its 3G strategies; PAS is unlikely to continue its high growth momentum in the coming years," she said.

She stressed that PAS should try to improve value-added services, making them the top priority. This would generate more profit, as PAS is losing its advantage of providing cheap rates, she said.

Both China Telecom and China Netcom have spent hundreds of millions of dollars in the past two years on PAS to fight China Mobile and China Unicom. Neither China Telecom nor China Netcom have mobile phone licenses.

Last Thursday, UTStarcom Inc also signed an infrastructure contract valued at US$67 million with China Netcom Group to expand its PAS networks in Heilongjiang, Liaoning, Shandong, Inner Mongolia Autonomous Region and Beijing.

Net sales for the first quarter of 2005 were US$901.8 million, an increase of 44.9 per cent over net sales of US$622.3 million reported in the first quarter of 2004.

Hong Lu, chief executive officer and president of UTStarcom, said the first quarter earnings results spoke for the progress made in the globalization and diversification of the company over the last year, and the importance of that process.

(China Daily July 13, 2005)