The rumor mill is cranking up on the China Mobile tender for Phase III of TD-SCDMA network construction. All sorts of market rumors saying that the bids have already been decided -- tough to know for sure.  But as mentioned in yesterday’s note, I don’t expect many changes in Phase III market share breakdown, which means the local companies will dominate.

As usual, China Mobile is tight-lipped about official results, but here's a story from qq.com “reporting” (speculating) on the Phase III outcome:

China Mobile: Datang-Alcatel, Huawei, ZTE Big Bid Winners

        Datang Telecom (600198.SH) and Alcatel Shanghai Bell together won 23% of the bidding;
        Huawei won 20%;
        ZTE won 18%;
        New Postcom took 15%;
        Fiberhome Telecommunication Technologies won 8%;
        Putian Group won 6%;
        Nokia Siemens took 5%;
        and Ericsson came out with 5%.

For some background, eight companies bid in Phase II, which was for 60,000 base stations. Datang Telecom (600198.SH), ZTE (Shenzhen: 000063; Hong Kong: 0763), and Huawei Technologies grabbed the lion's share, or about 81% of the deal, leaving a paltry 8% and 5% for Nokia Siemens Networks and Ericsson AB (Nasdaq: ERIC) respectively. China Putian (Potevio) took 6%.

The third round of bidding is valued at RMB8.6bn (US$1.26bn) in network equipment, including 39,000 base stations. Nokia-Siemens and Ericsson are expected to substantially drop their prices to better compete (see below), but it probably won’t gain them much since China is focused on elevating its own companies – no surprise there.

China Mobile is expected to begin construction of the network soon so that it can cover 328 cities by year-end, or about 70% of prefecture-level cities this year and 100% by 2011. Prefecture-level cities are administrative areas comprising a large city center plus much of the surrounding area including other cities, towns, and rural villages.

Thanks for reading,
mc

PS: More rumor-mongering below.

Rumor: Nokia Siemens, Ericsson Lower Bids for TD-SCDMA

    Yesterday China Mobile (NYSE: CHL, 0941.HK) stated that it had closed bid tendering for its third round of TD-SCDMA equipment procurement. To date, the market share among vendors is as follows: Datang Mobile and Alcatel-Lucent Shanghai Bell 23%, Huawei 20%, ZTE (000063.SZ, 0763HK) 18%, Postcom 15%, Fiberhome (600498.SH) 8%, China Putian (Potevio) (600680.SH) 6%, and 5% each for Ericsson and Nokia Siemens Networks.

    An industry insider disclosed that Ericsson and Nokia Siemens entered low bids in hopes of increasing market share. Overall, ZTE offered the lowest bid at RMB 12,300 – 12,600 per transceiver - less than half the price the company bid during bidding in the second-round of procurement. Huawei entered the second lowest bid of RMB 15,000 per transceiver. Datang Mobile made little change in its bid, keeping it roughly the same as that in the second round.

    Editor's Note: It was previously reported that this round of bidding would involve a total of 39,000 base stations and 260,000 carrier-
sectors in 200 cities around China.

Sources:
China Mobile: Datang-Alcatel, Huawei, ZTE Big Bid Winners
http://www.cn-c114.net/577/a409389.html

Rumor: Nokia Siemens, Ericsson Lower Bids for TD-SCDMA
http://www.marbridgeconsulting.com/marbridgedaily/2009-05-05/article/25951/rumor_nokia_siemens_ericsson_lower_bids_for_td_scdma