China Telecom Balks on Unicom Handset Inventory
Shihua Financial Information, 6/26/08
An industry insider has revealed that China Telecom (NYSE: CHA; 0728.HK), which will take over China Unicom's (NYSE: CHU; 0762.HK; 600050.SH) CDMA network, is considering how to deal with the large volume of Unicom custom-made CDMA handsets.
A source at a mobile phone market said that since removing Unicom's logo from the handsets would be very costly, China Telecom would probably not be willing to take over the existing inventory. Another source at a mobile phone market suggested China Telecom would probably insist that Unicom price most of its handset inventory to be sold before handover of the CDMA network. "For some difficult to obtain medium and high-end models, China Telecom might accept some volume, replacing Unicom's logo with its own."
One industry insider commented that the problem of how to handle Unicom's custom-ordered CDMA terminals is also one of the issues contributing to the difficulty in defining the value of Unicom's CDMA network assets.
China Telecom has asked CDMA handset vendors to ensure the timely supply of mobile terminals during the preparation and transition periods, cooperate in facilitating the transfer of the CDMA network business, and help in such areas as the transfer of handset procurement contracts and software upgrades.
Keywords: operator-customized handset restructuring 0728.HK 0762.HK 600050.SH CDMA CHA China Telecom China Unicom CHU mobile phone telecom wireless
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