www.shcri.com – More than 200 Chinese cities are engaged in China Mobile’s bid invitation of the third-stage TD. The purchase scale is about over 40,000 wireless base stations and 260,000 wireless sectors, which was 1.6 times the scale of the second-stage TD. Its total value is about 8.6 billion RMB (1.255 billion USD). CMCC revealed that the construction of the third-stage TD would be completed in October of 2009. By that time, the number of China Mobile’s TD base stations would reach more than 80,000 and cover 238 cities.
In bidding evaluation, the business tender accounts for 50%; the technical tender accounts for 25%; the evaluations on the construction in the first and second stages account for 15%. Meanwhile, brands and industry contributions account for 10% of the weight outcomes. The evaluation was directly connected to the final shares.
According to the evaluation result, ZTE Corporation, Huawei Technologies Co. Ltd, China Datang Corporation and Nokia Siemens rank the top four respectively. However, Potevio, Shaanxi Fenghuo, Ericsson and New Postcom rank the last four.
As to the comprehensive evaluation of equipment vendors, China Mobile divides the 8 equipment suppliers into Grade A and Grade B. ZTE Corporation, China Datang Corporation, Huawei Technologies Co. Ltd and Nokia Siemens belong to Grade A and the rest four belong to Grade B.
As to the assessment in technologies, ZTE Corporation, China Datang Corporation and Huawei Technologies Co. Ltd rank the top three respectively. Although they have some differences in scores, the differences are slight.
Before, CMCC had ensured the share of every equipment vendors through the first bid invitation, but it didn’t determine the concrete construction cities. In the third-stage bidding invitation, CMCC demanded that each province under the jurisdiction should recommend 2 enterprises of A type and 1 enterprise of B type. Each province could first choose the equipment suppliers by itself and then the group company selected from them collectively.
As the owner of patent TD, China Datang Corporation did not receive the expected courteous reception, which was embarrassing. Among the mobile operators in nearly 30 provinces, 29 of them chose ZTE Corporation, 23 of them chose Huawei Technologies Co. Ltd and only 3 of them chose China Datang Corporation.
When CMCC proposed that LTE should be evolved, and the equipments of China Datang Corporation which were unable to do so should be replaced, Datang still failed to improve its situation.
China Datang Corporation proposed to CMCC that the costs of the equipment replacement should be paid by CMCC. Just at this time, ZTE Corporation, Huawei Technologies Co. Ltd and other rivals copied the successful experience of the world’s low-price competition and put forward the free replacement program to the operators.
Therefore, CMCC logically inclined its scale – the equipments of the first–stage TD in Shanghai were moved and replaced by Huawei Technologies Co. Ltd; the equipments of the first-stage TD in Guangzhou were moved and replaced by ZTE Corporation; China Datang Corporation only maintained about 1/ 3 of the shares.
It is estimated that the replacement of equipments in Shanghai and Guangzhou is the two largest in TD local network. The number of base stations of the first-stage TD-SCDMA network in Shanghai is nearly 4,000. In the period of welcoming Expo, over 2,000 TD base stations will be constructed. The number of the first-stage TD-SCDMA in Guangzhou is over 2,000.
According to the incomplete statistics, if 3 sectors are needed to be replaced in a base station, and a sector costs 30,000 RMB (4,380 USD), then the cost of every base station and replacement is about 100,000 RMB?14,599 USD. To replace the 6,000 base stations, about 600 million RMB (87.59 million USD) is needed.
In China Mobile’s bidding invitation of the first and second stages of TD-SCDMA, to draw a distance between itself and other equipment vendors with TD system, China Datang Corporation of weak comprehensive strength once captured the market leading position with the lowest quoted price.
In the score ranks of equipment vendors of China Mobile’s third-stage TD-SCDMA, ZTE Corporation ranks the first in all the four evaluations, followed by Huawei Technologies Co. Ltd and China Datang Corporation. The quoted price of ZTE Corporation is the lowest. It is 12,300 RMB (1,796 USD) per carrier frequency and less than half of the tender price of the second-stage TD. The price of Huawei Technologies Co. Ltd is 15,000 RMB (2,190 USD) per carrier frequency.
According to the current share program, ZTE Corporation will undoubtedly be the biggest winner in TD market. Besides taking over 30% of the shares independently, nearly 50% of the shares in the first-stage TD tender and 28% of the shares (occupying the second rank) in the second-stage TD tender, ZTE Corporation will become the communications holding the largest TD market shares of China Mobile.
It is also closely related to the low price of 12,300 RMB per carrier frequency quoted by ZTE Corporation. Huawei Technologies Co. Ltd and Nokia Siemens also benefit from the bidding with low prices. The quoted price of Huawei Technologies Co. Ltd is only next to ZTE Corporation. To gain more market shares, Nokia Siemens has adopted the price-cut strategy for the first time. However, compared with the shares of the second-stage TD, its increase is limited.
Source: China Research and Intelligence
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Author : Based on the database, Interviews and research methods from China Research and Intelligence, CRI analyzes the development and opportunities in this industry clearly.