The Chinese Government will start awarding third-generation wireless licenses in the first quarter next year, following the completion of 3G trials ahead of the 2008 Beijing Olympics, China Netcom Chief Executive Zuo Xunsheng said Wednesday.
Many telecommunications industry executives and analysts had expected 3G licenses to be issued in China by now, but the issuance has been delayed until the homegrown transmission standard, TD-SCDMA, could be used alongside technologies from Europe and the USA.
China Netcom, which is the listed arm of China's second largest fixed line operator by subscribers; dominant mobile operator China Mobile; and, the country's biggest fixed-line operator, China Telecom, are participating in a TD-SCDMA trial.
"It will be too late if we don't see the first license by then," said China Netcom's Zuo Xunsheng, referring to the Chinese government's aim to see the launch of 3G service before the 2008 Beijing Olympics.
Zuo said the TD-SCDMA trial is taking longer than expected with unresolved problems such as compatibility with other 3G standards in international roaming services.
"The trial was expected to be finished in July this year, but I think the deadline has been moved to December instead," he said.
Zuo said 3G related investment, including a nation wide network, will cost an expected CNY80 billion to CNY100 billion.
"The investment will be made in about three years, which translates to around CNY20 billion a year," said Zuo, who didn't specify which 3G Standard his estimation was based on.
"There should not be any problem with our cash flow," said Zuo, adding the Hong Kong listed company had a free cash flow of more than CNY7 billion in the first half this year.
The company issued CNY10 billion commercial paper in July.
"We want the 3G network to be built by the Hong Kong-listed company, but in the worst scenario, the mainland parent (China Network Communications Group Corp.) will build the network and let the Hong Kong-listed company operate the service," said Zuo.
Zuo wouldn't comment on how many licenses, nor which standard, he expected would be awarded in the first quarter next year.
Netcom's mainland parent China Network Communications Group Corp. is also the second largest shareholder of Hong Kong dominant fixed-line operator PCCW with its 20% stake in the company
Macquarie Bank and US private equity firm TPG-Newbridge were vying to buy PCCW's assets, but faced opposition from China Network Communications Group, which says it wants PCCW to remain controlled by Hong Kong people.
PCCW chairman Richard Li last month sold the control of PCCW to banker Francis Leung for HK$9.2 million, which put an end to the talks with the two foreign suitors.
However, the Financial Times reported on its Web site Monday that Macquarie Bank is considering joining the consortium being put together by Francis Leung to buy PCCW.
Macquarie denied the report on Tuesday, but added it is still interested in discussions to buy PCCW assets.
Zuo said China Netcom won't oppose to foreign investor's interest in PCCW, as long as the control is in Hong Kong people hand.
"A more diversified funding (for PCCW) isn't a bad thing," said Zuo.
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