Don't expect China to issue licenses for 3G wireless networks until next year say many telecom-industry execs and analysts who had expected them to have been issued by now.
Ramstad mentions the possibility of consolidation among the nation's big-4 telecom operators -- China Telecom (CHA) the nation's largest fixed-line operator, China Mobile (CHL) the largest wireless carrier by subscribers, China Unicom (CHU) the second largest wireless carrier, and China Netcom the second largest fixed-line operator -- since they've begun to restructure as they built networks and added services. Growth is leveling off as prices have been falling and demand has already started to plateau.
A Deutsche Bank analyst in Hong Kong said the wait has left investors with "3G fatigue." And in a July 26 note to investors a JP Morgan Chase analyst said:
"We do not expect 3G licenses until 2007, and this topic is no longer a core part of our China investment thesis."
"... here is the bottom line: Stop waiting for China to issue third-generation licenses. Instead, look at operators' fundamentals as they release results in coming weeks. Also, it might be a good idea to check out China's oversold 3G-equipment makers."
Comment: Ramstad reports that China Mobile is leading the pack with a strong first-half earnings release yesterday that beat analyst estimates. China Netcom and China Unicom report next week and China Telecom reports August 30th. All three are expected to post single-digit revenue growth compared to China Mobile's 20% gain.
The DB analyst mentioned above thinks this could be a buying opportunity for equipment-vendor shares. Consider China TechFaith Wireless Communications Technology (CNTF), which got hammered Tuesday after reporting a lower Q2 profit.
Resources: China TechFaith Wireless Comm. Tech Q2 Earnings Conference Call Transcript; CNTF's IR webiste.
In IRG Limited's August 7th China Tech Stock Weekly Update it said, "Analysts are saying the mainland's major mobile operators are expected to post far more robust first-half results than fixed-line carriers."
Mention in IRG Limited's August 15th Chinese Tech Stock Weekly Update that "Foreign firms seeking to provide Internet service in China will be ordered to win approval from the local government ahead of such service."