Datang Telecom Technology Co Ltd, the major developer of a Chinese 3G (third-generation) mobile communications standard, is reportedly set to receive a cash injection from the Chinese government that could help the State-owned firm align its operations.

The Guangdong-based 21st Century Business Herald yesterday reported that the State-owned Assets Supervision and Administration Commission (SASAC) will inject 4 billion yuan into Datang Telecom.

Buoyed by the news, the listed firm rose to its daily limit yesterday although the Shanghai Composite Index recorded its largest-ever daily decrease.

Tang Ru'an, general manager of Datang Telecom, yesterday declined to confirm the funding. The SASAC was unavailable for comment.

But several industry observers said the funding is "highly likely" as the government is giving strong backing to TD-SCDMA, the Chinese 3G standard to compete with foreign rivals WCDMA and CDMA 2000.

The amount of funding has yet to be finalized, but it could be a "huge" cash injection, they said.

The funding comes at a time when TD-SCDMA, which has long lagged behind its foreign rivals, is gaining increasing momentum.

"TD-SCDMA is now on a healthy track," Tang told China Daily yesterday.

The Chinese government has yet to award licenses to operators to build 3G networks. But in recent months it has become increasingly likely that China Mobile, the world's largest mobile operator by subscribers, will choose TD-SCDMA to build its 3G networks.

China Mobile is already testing TD-SCDMA in Xiamen, East China's Fujian Province, while fixed-line carrier China Telecom is operating trial TD-SCDMA networks in Shanghai and Baoding. No 2 fixed-line telephone operator China Netcom is testing the technology in Qingdao and Beijing.

China Mobile is now expanding its trial networks to five more cities in a new round of testing. In January speculation was rife that China Mobile might inject 3 billion yuan into Datang Telecom.

An executive with a TD-SCDMA equipment vendor said all sellers had received invitations from China Mobile to bid for the supply of switches in the standard's new round of testing.

Vendors are required to submit "preliminary bids" today and formal bidding may start next week.

China Mobile will also soon invite bids from vendors to supply TD-SCDMA base stations, which usually account for 80 percent of spending on network build-outs.

The new trial networks could cost 20 to 30 billion yuan, the executive said, asking not to be named. Datang Mobile, a subsidiary of Datang Telecom, is one of the suppliers of TD-SCDMA equipment to China Mobile.

The SASAC's cash injection to Datang Telecom is expected to help Datang Mobile increase its strength in developing TD-SCDMA equipment and mobile phones.

(China Daily February 28, 2007)