Unicom launching China cell-phone network


China Unicom hopes the new network will help it raise its share to 35% of the world's largest mobile market

By Alex Frew McMillan
CNN Hong Kong

HONG KONG, China -- China Unicom will launch CDMA cell-phone service in mainland China on December 31.

China Unicom, China's second largest cell-phone company, said Sunday that it has finished construction of the first phase of its network.

The trial network is ready in seven cities - Beijing, Shanghai, Guangzhou, Chengdu, Hangzhou, Nanchang and Haikou - with a capacity of up to 100,000 customers, the company said in a release. It said a commercial trial will commence soon.

The first phase covers 330 cities in 31 provinces, the company said, with a total capacity of 15.15 million subscribers.

The network cost 24 billion yuan ($2.9 billion) to build.

CDMA, or code division multiple access, technology is the dominant cell-phone system in the United States. Unicom said in November that it would build out a CDMA network to run alongside its existing GSM system.

GSM is the dominant cell-phone technology in China, as well as in most of Asia and in Europe. But Unicom says CDMA technology, championed by Qualcomm in the United States, requires fewer cell-phone base stations to run.

Stock offering planned

It is building the network through its Unicom New Horizon subsidiary and plans to market the service to mid- and high-end users. It says CDMA technology, which it has licensed from Qualcomm, has both economic and technological benefits.

To build out the network, Unicom is readying the largest stock offering in the history of China's stock markets. It wants to sell around 12.5 billion yuan ($1.5 billion) in stock to domestic Chinese investors next year.

Unicom plans to build out a national CDMA network serving 50 million customers in all. It hopes that will help it boost market share from its current 27 percent to 35 percent by 2005.

China had 140 million cell-phone subscribers as of November, the Ministry of Information Industry stated last week. That reinforces its position as the biggest mobile-phone market in the world, ahead of the United States' 118 million mobile customers as of June.

China Unicom's stock, which is traded in Hong Kong, ended Monday's shortened session up 0.6 percent at HK$8.35.

That was in line with the Hang Seng's 0.46 percent increase on the day. Unicom's larger rival, China Mobile, was unchanged at HK$26.85.