SAN JOSE, Calif. China will continue its national roll out of 3G cellular services this year despite the global recession, spawning double-digit growth for network equipment vendors, according to an analyst's report.
Spending on wireless infrastructure equipment in China is expected to rise to $6.2 billion in 2009, up 13.2 percent from $5.5 billion in 2008, according to iSuppli Corp. The country's three main carriers will buy base stations, gateways and switches as well as gear to drive their core networks.
In contrast, global carrier spending on wireless infrastructure gear in 2009 will decline by 3.5 percent to $39.7 billion, down from $41.1 billion in 2008, the company predicts. India will show the second fastest growth in wireless carrier spending this year at a much slower 4.5 percent pace, iSuppli said.
"China's wireless operators in 2009 are set make multi-billion dollar infrastructure capital expenditures to support their roll outs of 3G networks," said Jagdish Rebello, director and principal analyst of wireless communications for iSuppli, speaking in a press statement. "These companies are moving aggressively on their 3G rollouts in order to they try to capture market share in the potentially lucrative domestic market for mobile-data services."
In May 2008, China's government announced long-awaited plans to award three 3G licenses as part of a major restructuring plan that paved the way for the spending this year. Under the plan, the government created three telecom providers—China Mobile, China Netcom (GSM) and China Unicom/Telecom—each with fixed line and mobile assets.
China Mobile will roll out a nationwide TD-SCDMA network in 2009, building on trials in major cities, iSuppli said. China Unicom and China Telecom will get their official 3G licenses in the first quarter of 2009.
China Unicom will launch its W-CDMA services in the second half of 2009. China Telecom has already started to secure quotes from equipment suppliers for the build-out of its 3G CDMA2000-1x-EV DO network, iSuppli said.
Among other growth markets in 2009 carriers in India, South Asia, and Africa "will continue to invest in expanding the coverage of their voice-centric 2G/2.5G networks in the face of strong subscriber growth in these parts of the world, but their pace of investments in networking infrastructure will be slower than originally forecasted," said Rebello.
Indian operators in particular will be cautious about 3G equipment investments in 2009, conserving cash after having acquired spectrum, iSuppli said. The market watcher expects most spending on 3G in India will start in 2010.
Global carrier spending on wireless infrastructure equipment will remain essentially flat in 2010, before rebounding with 4 percent growth in 2011, the company predicts. "Carriers in the developed nations will be cautious on their capital expenditures as they seek to maintain a positive cash flow in 2009," Rebello said.