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All eyes on China

February 16, 2004

The world's largest mobile market just keeps getting larger. There are now more mobile subscribers in China than landline users, official government figures show.

In 2003, China added 63 million new subscribers to its mobile networks. That meant more than 170 000 people signing up for a mobile every single day. By the end of 2003 there were around 269 million mobile subscribers compared with the 263 million landlines in the country.

 

While the rate of uptake is expected to level off there is still an enormous potential for growth in a country with 1.3 billion inhabitants.

 

For Ericsson, 2003 was also a good year in China with dozens of deals including one for USD600 million with Guangdong Mobile signed last August.

 

Good year in China
Ericsson is currently completing a GSM network expansion project in Guangdong province to increase the operator's mobile capacity to 36 million subscribers. The expansion is due to be completed this year.

 

Other deals included a USD56 million contract with Guangxi Mobile for the expansion of its GSM network as well as a USD57 million agreement to expand China Unicom's CDMA2000 1X network in the Jiangsu and Liaoning provinces.

 

Ericsson has signed an agreement to provide additional phase III CDMA2000 expansions for China Unicom. This follows other phase III agreements bringing the total value of the agreements to USD140 million.

 

Agreements were also signed with Heilongjiang Mobile and Hebei Mobile, among others.

 

Strong market share
Ever since mobile telephony took off in China about 15 years ago, Ericsson has had a strong market share. Today it has around 40% with China Mobile, the world's largest mobile operator, and a slightly smaller share with China's other operator, China Unicom.

 

While the 2G market is set for further growth, the 3G market is also about to open up. Licenses for 3G have not yet been formally assigned but operators have started preparing for the technology change. And China has not yet decided which of three different 3G technologies it will adopt.

 

Wideband Code-Division Multiple Access (WCDMA) is one of the main 3G technologies worldwide and boasts faster speeds and higher capacity than its competitors. Another option is the US-developed CDMA 2000.

 

Finally, China is studying a third, homegrown choice known as Time-Division Synchronous CDMA (TD-SCDMA). The drawback of the homegrown option is that, if China chooses it, it would probably be the only country to do so.

 

Whatever happens in China in 2004, it promises to remain a crucial market for Ericsson and other mobile heavyweights.

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