Sweden's Telefon AB LM Ericsson (ERICY) Wednesday said it has its eyes on further work in China, following the $600 million contract received Wednesday from Guangdong Mobile Communications Corp. Ltd.

An ad for the latest Sony Ericsson mobile phone on a street in Singapore. Ericsson has won a US$600m contract from Guangdong Mobile Communications on Wednesday. [AP]

China is expected later this year or in the first half of 2004 to issue third-generation network licenses to the country's telecommunications operators, Jan Malm, the head of Ericsson's Chinese operations, told Dow Jones Newswires. It could also see the emergence of new Chinese mobile operators.

That, on top of the increase in mobile customer subscriptions and traffic seen recently, should spark further orders for Ericsson's network equipment, Malm said.

China, alongside the U.S., stands as one of Ericsson's largest markets.

Malm said the rise in mobile traffic in China has been quicker than expected as operators become more competitive and reduce tariffs. This in turn has spurred a rise in new subscriptions.

China has yet to select the network standard it will adopt for 3G, but is reported to be considering the two global competing standards Wideband Code Division Multiple Access, or WCDMA, and CDMA2000, as well as a homegrown Chinese standard known as TD-SCDMA.

Malm said Ericsson sees TD-SCDMA as a local technology that could complement its own, rather than a technology it would compete against.

As reported, Ericsson said Wednesday that it has signed a deal to expand the Global System for Mobile, or GSM, -standard network of Guangdong Mobile, a subsidiary of China Mobile HK Ltd. (CHL), providing the infrastructure equipment to allow the network to reach 36 million subscribers. Guangdong Mobile is the largest mobile provider in China's Guangdong province and had 25 million subscribers at the end of June.

Ericsson has been pushed into the red by a sharp decline in investment by telecom operators globally, and posted a second-quarter net loss of SEK2.7 billion on the back of a roughly 20% decline in sales over a year ago.

However, the company said it remains committed to returning to a profit during 2003, having halved its operating expenses over the past eight quarters.

Company Web site: http://www.ericsson.com

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