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Let's end this back-to-work week with a few telecoms news bits, starting with word that leading telco China Mobile (NYSE:CHL) has wisely decided to abandon a bid for a Pakistani telco. Media are also reporting that China Mobile is edging closer still to a long-awaited deal to offer iPhones on its network, with word of a new key hiring move by Apple (NASDAQ:AAPL). Lastly there are reports that China Telecom (NYSE:CHA), the smallest of China's 3 carriers, has selected suppliers for the first phase of construction for its 4G networks, giving most of the business to Chinese firms.

Perhaps the biggest theme in all this is that China's 3 telcos, despite their large size and deep resources, are still a very insular group that take their cues from Beijing and aren't very skilled at dealing with foreign companies. While that stance may serve them well in their highly protected home environment, it has also worked to China's disadvantage by stifling innovation due to lack of competition.

All that said, let's look at the latest headlines, starting with word that China Mobile has officially scrapped its bid for Pakistani carrier Warid Telecom (Karachi-PTCA). (English article) China Mobile already owns a Pakistani mobile carrier, which is its only major overseas holding. It was hoping to combine that telco with Warid, but decided to abandon that bid after having a look at the company's books, a company official said.

While I've generally been quite critical of China Mobile's ineffective overseas expansion program, I have to commend it on its decision to abandon this deal. Pakistan may be a large market by population, but it's also filled with problems and few potential rewards due to its political instability and low living standards. Earlier this year China Mobile scrapped a plan to bid for a new mobile license in Myanmar, which looked much more promising to me. This dropping of the Warid bid means that for now at least, the company's overseas expansion will remain largely dormant.

Meantime, media are reporting that Apple is hiring a chief engineer to oversee TD-LTE, the technology being used by China Mobile in its 4G network. (Chinese article) In my view, this news is very incremental and not surprising at all, since media have been reporting for months now that a China Mobile iPhone deal was imminent. Such a deal would come as a big boost for Apple, which already has iPhone deals with China's 2 smaller mobile carriers but not yet with China Mobile. Frankly speaking, I'll be quite happy when the 2 companies finally sign this tortured deal, which has taken far too long to reach.

Finally there's China Telecom, which has reportedly awarded nearly two-thirds of the first major contracts for its 4G network to homegrown equipment suppliers Huawei and ZTE (OTCPK:ZTCOF). (English article; Chinese article) Among foreign bidders, the only major winner was France's Alcatel Lucent (NYSE:ALU), which reportedly won 17 percent of the contracts. European giants Ericsson (NASDAQ:ERIC) and Nokia Solutions (NYSE:NOK), formerly known as Nokia Siemens Networks, both reportedly won less than 5 percent of the business.

While the European suppliers suffered a setback, it's probably not as bad as it looks since the size of the tenders was probably relatively small, perhaps worth $10 billion or less in total. Ericsson and Nokia Solutions also are weak in the technology used by China Telecom. Still, this relatively poor showing by the foreign equipment suppliers does underscore the fact that the Chinese telcos increasingly prefer to buy their equipment from homegrown companies, a decision that looks at least partly political.

Bottom line: China Mobile's plan to drop a bid for a Pakistani telco looks like a smart move, while China Telecom's award of 4G construction contracts reflects a growing preference for domestic suppliers.

Source: China Mobile Drops Pakistan Bid, Telecom Picks Huawei, ZTE