CHINA Telecom Corp and China Netcom Group (Hong Kong) Ltd, the country's two biggest fixed-line operators, said China will soon issue licenses for third-generation wireless networks. The stocks surged.
Zuo Xunsheng, China Netcom's chief executive officer, said the licenses may be issued by the end of the year, while China Telecom Group Vice President Leng Rongquan said the permits will be granted "soon," without providing a timeframe, Bloomberg News reported.
Carriers expect 3G services, which allow faster video and music downloads, will help boost earnings in the world's biggest wireless market by users. Nokia Oyj, the world's largest handset maker, expects China mainland's mobile subscribers to rise 11 percent to more than 500 million next year, driven by growth in rural areas.
"China Telecom and China Netcom are both possibilities to win a 3G license," said Kenny Tang, the research director at Tung Tai Securities Ltd in Hong Kong. "In the short term, there is room for speculative buying in these stocks."
Leng and Zuo spoke at the International Telecommunication Union's Telecom World conference in Hong Kong.
China Telecom stock in Hong Kong rose 16 percent to HK$4.02 (52 US cents), while China Netcom gained 8.5 percent to HK$16.16. China Unicom Ltd, the smaller of the country's two mobile-phone operators, climbed 6.5 percent to HK$9.14, while China Mobile Ltd increased 0.7 percent.
"With the conference in town there's a bit of irrational exuberance among local investors," Steven Liu, analyst at DBS Vickers Ltd in Hong Kong, said. "China Mobile was the only one among the big four mainland telecom operators who didn't comment on the timing of issuance of 3G license," which might explain why the stock didn't rise as much as the others, he said.
Companies including Sweden's Ericsson AB, the world's largest maker of wireless-network equipment, and Nortel Networks Corp. are seeking contracts worth about 205 billion yuan (US$26.1 billion) to supply telecom and network equipment in the mainland.
China's mainland had 449 million users as of October, more than the populations of Japan and the US combined.
"China mainland will consider three standards for 3G," Wang Xudong, the nation's Minister of Information Industry, said. "The timing for issuing 3G licenses will be determined by the market."
The mainland has already chosen the homegrown time division-synchronous code division multiple access, or TD-SCDMA, standard for one of the 3G networks. China may need to spend 100 billion yuan to build a TD-CDMA network with capacity for 50 million users, Xie Linzhen, vice chairman at the state-controlled China Mobile Communications Association, said on September 8.
