Wireless: Share Price Ticks Upward on Announcement Of $1.5B in Contracts
Apparently serious about deploying Code Division Multiple Access technology in China, carrier China Unicom last week ordered almost $1.5 billion worth of telecommunications equipment based on the wireless standard.
The orders for the infrastructure equipment were good news for San Diego-based Qualcomm Inc., a pioneer in Code Division Multiple Access, or CDMA, which holds key patents on the technology.
Judging from U.S. media accounts and company statements, China’s feelings for CDMA have run hot and cold over at least the past year.
During that time, Qualcomm experts said equipment orders were the evidence they sought regarding CDMA’s rollout in China , though one analyst early this month said he also wanted to see the CDMA products shipped and revenues recognized.
The equipment orders were announced May 15. Qualcomm stock, which had closed at $56.92 per share on May 14, closed at $59.50 on May 15 then $64.76 on May 16.
More than $200 million of the new Chinese orders went to a joint venture of Ericsson CDMA Systems of San Diego.
Nanjing Ericsson Panda Communications Co. Ltd. will deliver CDMA equipment for use in seven Chinese provinces. The networks are expected to operate commercially in the fourth quarter of this year, Ericsson officials said in a prepared statement.
Joint ventures involving Lucent, Motorola and Nortel also received orders , some topping $400 million , according to published reports.
& #313;ke Persson, president of Ericsson’s San Diego unit, said his company was honored to be helping China Unicom roll out a CDMA network.
CDMA’s prospects in China seemed to rise and fall at various points in 2000 and this year.
In May 2000, for example, China Unicom said it would not adopt CDMA.
At another point in the year, China’s Ministry of Information Industry seemed to block the entry of CDMA to the country. The agency is similar to the Federal Communications Commission in the United States. A few weeks ago, Chinese officials reportedly postponed the announcement for equipment orders. Some Qualcomm watchers interpreted it as a bad sign.
At other points during the courtship, Qualcomm executives put out different reports , a kind word from a Chinese official here, a memorandum of understanding there , indicating there was still hope in the relationship.
China Unicom is that country’s second largest mobile telecommunications operator.
Ericsson officials said the company’s CDMA equipment was going to the Jiangsu, Anhui, Sichuan, Yunnan, Liaoning, Heilongjiang and Henan provinces. The equipment includes 800-megahertz radio base stations, base station controllers, mobile switching centers and home location registers. Ericsson will also provide support services.
Published reports said the CDMA network could serve roughly 15 million subscribers.
A competing air interface technology called Global System for Mobile communications (GSM) is already established in China.
