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Rumor: China Mobile TD-SCDMA Procurement Bids Rise

Sina Tech, 11/04/11

China Mobile's (NYSE: CHL; 0941.HK) fifth-phase TD-SCDMA systems equipment tender preliminary results were recently released, according to an industry source, unexpectedly showing manufacturer bids had no appreciable decline from the last tender and were in some cases considerably higher than fourth-phase bids.

The fifth-phase TD-SCDMA bids included mobile network equipment, core networks, and project design, and totaled more than RMB 19 bln by the operator's own calculations. China Mobile intends to deploy more than 50,000 new TD-SCDMA base stations in this phase. The operator announced the tender before the October 1 holiday, and received bids from manufacturers before October 13.

The latest round of bids differs from earlier rounds in giving provincial-level China Mobile subsidiaries substantially more latitude for decision. An industry source told Sina Tech that in earlier tenders, procurements were split between China Mobile headquarters and provincial subsidies at a roughly 7:3 ratio, while the latest tender divided procurements evenly.

The latest round of bids did not fall into the price wars that characterized fourth-phase TD-SCDMA bids. During that phase, some manufacturers offered prices up to 70% lower than their third-phase prices, leading to a number of dark horse winners. In fifth-phase bids, some manufacturers quoted prices more than 30% higher than their fourth-phase bids, indicating a growing coolness towards TD-SCDMA tenders and a desire to go from losing money, as in earlier tenders, to turning a profit.

Keywords: capex China Mobile mobile network equipment procurement wireless CHL TD-SCDMA 0941.HK 3G network construction base station

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