Related Story: 1st WCDMA Mobile Phone Chip Produced

BEIJING- It may take one year for China to go from issuing its first 3G license to accomplishing full-blown commercial 3G application, and the whole industry will begin yielding profit after 2008, China's Fortune Securities analyst Tian Dongwei said in a recent report.

Tian says the 3G industry will benefit companies on the value chain phase by phase.

In the nearest term, companies providing testing equipment, system integration and software services will benefit the most.

Because of the increase in the number of operators, higher demand for value-added service and data services, network reliability and service diversity will feature 3G-era competitions, spelling large growth room for afore-said companies.

Equipment manufacturers will be the second bunch of beneficiaries. By far, China's telecommunication equipment manufacturers are competitive already.

With the issuing of 3G licenses, the recovering telecommunication fixed-asset investment and boosted export, China's major telecommunication equipment manufacturing will restore in the years to come.

According to Chinese IT consultancy CCID, China's 3G equipment investment will total RMB200 billion (US$24.7 billion) in 2005-09. Higher demand for telecommunication equipment will ripple into upstream sectors like semiconductors, benefiting companies like ZTE and Datang Telecom Technology.

Mobil phone producers like Amoi, ZTE, TCL and Chinabird Mobil Communication will benefit next.

Operators like China Unicom will benefit in a longer term. Tian says operators like China Unicom dont have to pay lump-sum licensing fee, and the cost of promoting 3G usage will decrease with the lowering mobile phone prices and rising percentage of consumers buying 3G mobile phones on their own.

3G will become a major growth point for China's telecommunication operators. According to CCID predictions, in 2006-10, 3G will make up more than 50 per cent of the country's mobile communication revenue, up from the current 7 per cent, and 30 per cent of the total telecommunication revenue.

Tian predicts that a booming 3G market requires for more value-added services, providing business opportunities for content providers.

(Source: Asia Pulse/Photo: thebeijingnews.com)