Big changes in telecoms sector
By Li Weitao (China Daily)
Updated: 2006-06-21 09:05 "The combined company is also well-positioned for emerging markets in
theAsia-Pacific such as India."
Huawei and ZTE generate most of their
overseas revenue from developing countries or emerging markets. In the first
half of last year alone, Huawei's overseas revenue had already exceeded its
domestic turnover.
Thanks to their low-cost and high-quality telecoms
equipment, Huawei and ZTE already pose a threat to established global vendors
such as Ericsson, Alcatel/Lucent and Nokia/Siemens.
The Nokia-Siemens
deal, which will save the two firms 1.5 billion euros (US$1.9 billion) per year,
is understood to have been partly designed to fight off Huawei and ZTE,
analysts said.
Eagle Zhang, vice-president of Beijing-based research
house Analysys International, said TD-SCDMA, a Chinese homegrown standard for
third generation (3G) mobile telephones, might have played a role in the
Nokia-Siemens deal. Compared to rivals such as Alcatel, Nokia is a latecomer to
the TD-SCDMA camp; the firm only formed a joint venture with Chinese telecoms
equipment maker Potevio last October.
3G networks based on TD-SCDMA have
yet to be commercially deployed unlike the rival 3G standards WCDMA and
CDMA2000. The Chinese Government is betting that TD-SCDMA can help to reduce
reliance on foreign technology.
"China's persistent support for TD-SCDMA
has forced foreign companies such as Nokia to review their strategies and
expertise in Chinese technology," said Zhang.
Siemens is the largest
foreign investor in TD-SCDMA.
The Nokia-Siemens deal is also expected to
squeeze Huawei and ZTE in the future WCDMA market in China.
Globally,
Ericsson, Nokia and Siemens are the world's top three WCDMA players.
The
Chinese Government has yet to decide when and how to allow operators to
build 3G networks. But China Mobile, the world's largest mobile operator in
terms of subscribers, is widely believed to favour the WCDMA
standard.
"Obviously, Nokia/Siemens will become a much stronger force in
the Chinese market, which will make them a strong competitor when offering WCDMA
solutions," said Wang. "This will have a negative impact on Huawei and
ZTE."
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