China Telecom Corporation Ltd. (NYSE: CHA, SEHK: 0728), one of the big three telecom carriers in the country, is taking measures to enrich its CDMA mobile phone portfolio, particularly the medium-end CDMA cellphones.
The kinds and proportion of medium-end CDMA mobile phones had been poor before China Telecom took over the CDMA network from its rival China Unicom (Hong Kong) Limited (NYSE: CHU, SEHK: 0762 and SHSE: 600050) under the nation's telecom industry regrouping scheme.
At the end of 2008, types of CNY 700-1,000 and CNY 1,000-1,500 priced CDMA cellphones only accounted for 2.9% and 2.8% of all CDMA handset types. In contrast, types of CDMA cellphones below CNY 700 took up 70% or so.
Ma Wu, deputy general manager for China Telecom mobile terminal management center, said at the terminal industrial chain cooperation forum in 2009 that his company hoped to reduce the share of low-end mobile phones to 30% and increase the share of medium-end mobile phones to 60%.
However, the situation kept unchanged last year. Although the sales volume of CDMA terminal products surged 300% in 2009, the sales of high- and medium-end products, priced over CNY 700, rose 167%. In detail, the sales volume of CDMA mobile phones below CNY 700 swelled to 23.46 million units in 2009 from 5.61 million units in 2008. The sales volume of CDMA cellphones, priced between CNY 700 and CNY 2,000, grew to 3.56 million units from 910,000 units.
By 2009-end, the shares of CDMA mobile phones under CNY 700 and above CNY 2,000 had arrived at 83% and 4%. The share of CDMA mobile phones between CNY 700 and CNY 2,000 had reached 13%, according to a survey by a consulting firm.
Thus, China Telecom unveiled a plan when the CDMA2000 Cellphone Design and Development Industry Alliance, initiated by China Telecom, was formed in Beijing on March 5, 2010. According to the plan, the telecom carrier will team up with chip makers, software builders, as well as design firms to research and develop mainboard solutions and supply the solutions to terminal manufacturers. They will come up with several solutions, supply each solution to certain manufacturers and offer R&D subsidies for tailored mainboards.
The move can cut terminal manufacturers' R&D input, lower down threshold for CDMA terminal production, solve problems in the CDMA industrial chain, cut CDMA mainboard shipment prices, and enhance CDMA terminal competiveness. More design sources will flow into the CDMA terminal sector because they do not need to carry out mainboard research and development.
