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Telecoms Key in New Investment Strategies
China's telecom carriers will be more rational and focused in their fixed asset investments this year but spend about the same as last year, experts predicted yesterday.

"Telecom carriers and investors will pay more attention to the returns and long-term interests of their investments this year," said Huang Yong, vice-president of CCID Consulting Co, a market research firm specializing in information technology (IT).

The company, which is affiliated with the Ministry of Information Industry, held the 2003 China IT Market Forum in Beijing yesterday.

CCID Consulting predicted at its annual event that telecom operators and investors would invest 210 billion yuan (US$25.4 billion) this year, compared with 210.5 billion yuan (US$25.5 billion) last year.

Huang said both China Mobile Communications (China Mobile) and China United Communications (China Unicom), the country's two leading mobile carriers, will reduce their investments in the second-generation GSM (global system for mobile communications) networks in 2003.

"We believe China Mobile will double its investment in data networks like wireless local area network (WLAN) and the 2.5-generation GPRS (general packet radio switch) system," Huang said.

At the same time, it may cut spending on transmission networks and instead fully use the capacity of existing networks.

Meanwhile, China Unicom will concentrate on its CDMA (code division multiple access) network and sharply slash its investment in the GSM network. It is expected to invest 20 billion yuan (US$2.4 billion) in 2003.

According to the research house, China Unicom's CDMA subscriber numbers will grow to 34.4 million and 59.7 million in 2004 and 2005 respectively.

Huang believed that China Netcom Corp could pour 27.5 billion yuan (US$3.3 billion) into fixed asset investment in 2004, 10 per cent more than this year.

Foreign investors will become an important force in telecom fixed asset investments, Huang predicted.

"After watching the market for a year since China entered the World Trade Organization, foreign businesses will invest 10 billion yuan (US$1.2 billion) this year," he said.

Stimulated by massive fixed asset investments, China's network equipment will ride out last year's slump, CCID Consulting predicted.

"We believe average annual growth will exceed 20 percent in the next five years due to China's investment in next generation networks and e-government, and due to the adoption of information technologies by enterprises," Huang said.

Mobile telecommunications will continue to be the hottest area of China's telecom sector, the CCID Consulting analyst said.

The research firm predicted that the number of mobile subscribers in China will grow by more than 60 million to 270 million this year.

Multimedia messaging service (MMS), which enables mobile subscribers to send pictures and video via cell phones, will also become popular in China this year.

China Mobile launched the service in October and China Unicom will start similar services on its CDMA 1X network soon.

(China Daily February 19, 2003)

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