Spending by China's big telecom service providers is expected to slow after a host of contracts that have bolstered struggling equipment makers such as Nortel Networks and Lucent Technologies.
Industry watchers say a series of wireless network contracts worth $1.2 billion handed out Monday by China Unicom will likely mark the end of the boom.
Monday's contracts, to upgrade a year-old CDMA wireless phone network run by China Unicom and its overseas listed China Unicom Ltd., were handed out to Nortel, Lucent and Motorola.
Nortel said it will provide equipment worth $280 million to five provinces and one municipality with a combined population of 387 million people, 26.2 per cent of China's population. Motorola said its share was worth $446 million to provide equipment in 11 provinces. Lucent valued its contract in the hundreds of millions dollars (all figures in U.S. dollars).
Nortel has won a string of contracts in China over the past few quarters as the Asian powerhouse provides some relief from the persistent slump in the telecommunications market seen in the U.S. and Europe. China continues to expand fixed and wireless phone networks, even though demand for infrastructure has slowed this year.
However, that spending is slowing down.
Three of China's four largest telecom network operators have announced capital spending reductions in recent months.
China Telecom said its capital expenditures will drop almost 30 per cent this year. China Mobile, the world's largest mobile phone company by number of subscribers, plans to spend about 20 per cent less, while top rival China Unicom is cutting back 27 per cent.
Monday's string of contracts from China Unicom is likely to be the industry's biggest for at least the next year to 18 months, David Wolf, leader of the technical practice at Burson Marstellar, told Reuters.
"What's important to note is that selective equipment purchases in China will continue, that you will have occasional milestones like this, probably on the order of once a year or every 18 months," he said.
Industry watchers say a series of wireless network contracts worth $1.2 billion handed out Monday by China Unicom will likely mark the end of the boom.
Monday's contracts, to upgrade a year-old CDMA wireless phone network run by China Unicom and its overseas listed China Unicom Ltd., were handed out to Nortel, Lucent and Motorola.
Nortel said it will provide equipment worth $280 million to five provinces and one municipality with a combined population of 387 million people, 26.2 per cent of China's population. Motorola said its share was worth $446 million to provide equipment in 11 provinces. Lucent valued its contract in the hundreds of millions dollars (all figures in U.S. dollars).
Nortel has won a string of contracts in China over the past few quarters as the Asian powerhouse provides some relief from the persistent slump in the telecommunications market seen in the U.S. and Europe. China continues to expand fixed and wireless phone networks, even though demand for infrastructure has slowed this year.
However, that spending is slowing down.
Three of China's four largest telecom network operators have announced capital spending reductions in recent months.
China Telecom said its capital expenditures will drop almost 30 per cent this year. China Mobile, the world's largest mobile phone company by number of subscribers, plans to spend about 20 per cent less, while top rival China Unicom is cutting back 27 per cent.
Monday's string of contracts from China Unicom is likely to be the industry's biggest for at least the next year to 18 months, David Wolf, leader of the technical practice at Burson Marstellar, told Reuters.
"What's important to note is that selective equipment purchases in China will continue, that you will have occasional milestones like this, probably on the order of once a year or every 18 months," he said.
