China Will Issue 3G Licenses to 3 Main Carriers

China's Ministry of Industry and Information Technology said it would issue Licenses for next generation (3G) mobile networks to its three state-run carriers on Wednesday afternoon.

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China Mobile, the world's largest mobile carrier, will be issued a license for TD-SCDMA on Wednesday, Wang Lijian, the director of the ministry's news office, told Reuters in a telephone interview.

China Mobile, which controls about 72 percent of China's wireless market, will be licensed to use TD-SCDMA, a technology that is domestically developed and heavily backed by Beijing but that will be costly and complicated to roll out.

In addition, smaller rival China Unicom would be given a license to develop a WCDMA network, and China Telecom would receive a license for CDMA 2000 later in the day, said Wang.

The new technology will enable faster data downloads, allowing cell phone users to make video calls and watch TV programs. The two versions to be used by China Unicom and China Telecom are widely used around the world and should be much easier to deploy and service than TD-SCDMA.

"Market expectations have been completely factored in. That's why share prices of the three companies are heading south," said Fang Lu, a telecom analyst with Shenyin Wanguo Securities in Shanghai.

China Mobile shares were down 0.18 percent in late morning trade, on par with the main Hong Kong index, which was down 0.13 percent. 

On Tuesday, China Mobile stock fell 2.4 percent and rival China Unicom dropped 5.3 percent following two sessions of strong gains.

All three stocks had rallied on hopes that Chinese telecom companies would be able to offer third generation network services soon, after Beijing approved the long-awaited issuance of 3G Licenses last week.

The issuance of Licenses and the allotment of the different technologies was largely a formality after the industry minister laid out the plan last month.

The ministry said then that spending on equipment by carriers would total $41 billion over the next two years.

China Unicom and China Telecom, the smaller telecom players, are expected to grow faster than China Mobile in terms of new user and sales growth due to Beijing's asymmetric regulation policy in the mobile industry, Fang said.

The brokerage holds an "outperform" rating on China Unicom and is "neutral" on China Telecom and China Mobile.

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