Samsung wins China Unicom CDMA bid

Samsung has been selected as an equipment provider for China's new generation CMDA mobile phone network

In this story: Clinching the contract Rolling out the network Increasing market share RELATED STORIES, SITES

By Staff and wire reports

SEOUL, Korea -- Samsung Electronics has won a $500 million contract to supply network gear to China's number-two mobile operator China Unicom.

China Unicom selected Samsung as well as Motorola, Nortel Networks, Lucent Technologies and Ericsson as its equipment suppliers, according to South Korean media.

A leading CDMA handset maker, Samsung is also planning to set up mobile phone production centers throughout China to strengthen its position in the world's second largest mobile market after the U.S.

Clinching the contract

Samsung was one of 13 vendors bidding for billions of dollars in contracts to build a huge CDMA-standard mobile phone network in China.

"Chinese Premier Zhu Rongji informed the information minister of the results," said Seoul's Information and Communication Ministry in a statement.

Media in Seoul reported that Motorola, Nortel Networks, Lucent Technologies, Ericsson, and China's Shenzhen Zhongxing Telecom had also won CDMA contracts from Unicom.

A spokesman for China Unicom Group, the state-owned parent of Hong Kong and New York-listed China Unicom said the company had "no public announcement."

The bid winners are to supply and install CDMA equipment by September before full commercialization in October, South Korea's Maeil Business Newspaper reported.

Rolling out the network

China Unicom plans to invest $8.46 billion in its long-awaited CDMA network over three years, according to official Chinese media.

The parent firm will build the CDMA network and plans to lease it to the listed company.

Samsung's initial order is worth $150 million, and will total $500 million by early 2002, the Seoul ministry said. Samsung will supply network equipment to Shanghai and three other cities.

China Unicom's nationwide network, using the CDMA standard developed by U.S.-based Qualcomm, is expected to cover 300 cities and serve as many as 13.3 million customers this year, with growth of more than 10 million users a year, the official China Daily reported in late March.

Last month, China Unicom, the smaller of China's two big state-backed mobile carriers, unveiled the project's $2.42 billion first phase to 13 prospective vendors, including foreign and domestic firms.

CDMA, or code division multiple access, is a wireless standard that allows carriers to cram more traffic across limited airwaves than the competing GSM standard than now prevails in China and Europe.

Qualcomm, which holds the lucrative patents on the technology, has long been frustrated by China's off-again, on-again plans to build a CDMA network. Some analysts have questioned the wisdom of rolling out a vast network using a different standard when China is already dominated by GSM.

For Qualcomm and other vendors, the stakes are massive. China had 85 million mobile users at the end of 2000, and some watchers predict China will surpass the United States as the world's biggest wireless market by the end of this year.

Increasing market share

Samsung currently holds a four percent market share in China's mobile phone market, but has yet to open a manufacturing facility in mainland China.

However, the electronics firm has recently announced plans to set up mobile phone production centers in Shenzhen, Tianjin and Shanghai to further strengthen its position in China. Two of the production centers will start operations by the end of the year.

Insiders told the Interfax news agency that at the Tianjin production center Samsung plans to focus on production of CDMA handsets.

Shares in Samsung were down 2,500 won to 223,500 won on Thursday. China Unicom shares rose 0.48 percent to HK $10.50, far below a 52-week high of HK$22.

Reuters contributed to this report.

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