China has been the one shining star of the mobile firmament. Many executives across the world have been counting on China’s 3G buildout as a way to prop up their sales, earnings and of course the stocks. Well it looks like the frenzy which was expected to start in January 2005, might be pushed back to July 2005, or even further. Mark Sue, the wireless analyst for RBC Capital Markets has been spending a lot of dollars on long distance calls and has learned ” the awarding of 3G licenses will now be pushed back from early 2005 to July 2005 and possibly into late 2005.”
This cannot be good news for companies like Nortel, which gets 50% of its revenues from wireless. Nortel has 3G trials in Guangzhou with China Unicom for both WCDMA and CDMA2000. Lucent that rakes in 45% of its sales from wireless is also on a sticky wicket. China accounts for an estimated 9% of Lucent’s total revenues. Lucent has a CDMA2000 trial with China Telecom in Guangzhou along with a WCDMA trial with Netcom in Shanghai. ” Ericsson, Motorola and local vendors Huawei and ZTE are currently best positioned to grab a large share of the 3G builds. While the China opportunity appears large, we note that equipment from essentially all the major vendors are installed in the Chinese carriers’ networks with the environment ripe for continued pricing competition,” Sue writes in a note to his clients.