China's major telephone operators are squaring up to each other as 3G services loom.

 

Despite reporting a 2006 net profit of almost 10.6 billion yuan (US$1.4 billion) on Monday, China Netcom, one of the country's two leading fixed-lined telephone operators finds itself -- along with its fixed-line rival China Telecom -- in a position of weakness compared with the country's mobile phone operators.

 

With new cell phone subscribers far outpacing new fixed-line phone users, the two fixed-line operators have decided to cut capital expenditure budgets for 2007.

 

The cuts are intended to improve their 3G preparedness. China Telecom Chief Wang Xiaochu said his company has improved cash flow to prepare for the purchase of 3G licenses.

 

Wang Xudong, China's information industry minister, said the country will provide 3G services for the 2008 Olympic Games.

 

Analysts predict China will complete 3G network infrastructure construction in six to twelve months.

 

The major four operators -- China Netcom, China Telecom, China Mobile and China Unicom -- have started training 3G talents, constituting a war chest and making technological preparations for a smooth transition from the existing mobile telecom networks or PHS networks to 3G.

 

China Mobile, the largest mobile operator in China, has played a leading role in tests of the homegrown TD-SCDMA network. China Telecom and China Netcom have also taken part. They have built a total of 100 base stations for the test networks.

 

China Unicom, the second largest mobile operator, saw its CDMA network turn a profit for the first time last year. It will provide 3G services in Macao at the end of 2007 and is applying for 3G licenses in Hong Kong.

 

China Telecom, the largest fixed-line operator in China, hopes to transform its business by acquiring mobile telecom assets, according to the company's general manager.

 

Squeezing investment in its fixed-line network, China Netcom has been restructuring its internal assets, and in particular integrating the assets of the former Asia Netcom, so that it can use its resources more efficiently.

 

(Xinhua News Agency April 4, 2007)