Alcatel, Shanghai Bell JV makes first ring
( 2002-05-29 10:13 ) (1 )

Shanghai Bell, one of the country's biggest telecom equipment manufacturers, launched a partnership with France-based Alcatel to create Alcatel Shanghai Bell, the country's first foreign-invested limited telecom company on Tuesday.

Alcatel and Shanghai Bell expect sales of US$2 billion in the first year of operations, said Serge Tchuruk, chairman and chief executive officer of Alcatel.

The new company's structure, which is different than any other foreign invested joint venture in the telecom industry in that it will be the first telecom company where a foreign company owns the majority, will significantly speed up response to domestic demand and better serve Chinese telecom operators, he said.

With a registered capital of US$600 million, the new company will integrate Alcatel's 17 local joint ventures to produce a full range products for Alcatel, he said.

It is expected to reach an export of US$1 billion within the first three years.

Alcatel and Shanghai Bell signed a memorandum of understanding (MOU) to create a company last October. Under the MOU, Alcatel holds 50 per cent plus one share in the new company while Shanghai Bell holds the remaining ones.

Shanghai Bell, China's first joint venture telecom equipment provider opened in 1983 and is regarded as the country's representative in traditional telecom companies. It is the country's top telecom switching machine maker (the machines transfer fixed phone lines), and had a revenue of US$1 billion in 2001.

The new company will join both companies to extend advantages in full range telecom equipment and coverage in 130 countries and regions. Decades of experience in the Chinese market and far-reaching distribution channels around the country will also benefit the new company, said Yuan Xin, chairman of Alcatel Shanghai Bell.

Regarding the slowdown in investment of major Chinese telecom carriers, Yuan said he is confident the market will rise in several months as severe competition drives telecom carriers to adopt new technology and provide more services.

Forecast made earlier said that development of China's telecom market will slow down this year due to the unstable situation following China Telecom's split into two parts. Other companies such as China Mobile and China Unicom, the country's two mobile carriers, also announced that they would cut investment by 17 and 30 per cent respectively.

But the situation may change in a few months and the carriers will probably revise their budgets as China's market becomes more competitive this year and the increase of new subscribers does not slow down, industry experts said.