Tuesday, January 18, 2005

UTStarcom Signs $40 Million in Contracts with China Netcom

UTStarcom announced contracts valued at approximately $40 million with China Netcom Group (CNC) to expand the operator's existing IP-based PAS (Personal Access System) networks in the Shandong and Henan provinces, as well as in metropolitan Beijing.

Over the last two years, nearly 60% of new fixed-line subscribers at China Netcom are PAS users. The carrier is expecting positive growth rates for PAS subscribers through 2008. In addition, the operator believes that they will be able to leverage existing PAS network infrastructure to deploy 3G services when licenses are issued.

UTStarcom noted that there have been several changes in the structure of the telecom industry in China over the last several months, including restructuring of the management teams at the major operators and centralization of procurement procedures. These changes were implemented late in the fourth quarter of 2004 and have lengthened the time it takes to achieve final acceptance and revenue recognition.

In Beijing, PAS subscribers topped 1.5 million by the end of 2004, 18 months after the service was launched in mid-2003. In the Shandong Province in eastern China, more than five million people currently subscribe for PAS service. More than 2.5 million people currently subscribe for PAS service in the Henan Province in central China, where PAS networks have been expanded four times since the service launched in 2000. Approximately 23 million of the total 65 million PAS users in China have subscribed for the service through China Netcom, which represents an 81% year-over-year subscriber growth rate with the operator from 2003 to 2004. UTStarcom builds more than 60% of China Netcom's PAS networks and provides over 55% of the operator's PAS handsets.


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