Ericsson sees no China 3G licences this yr

STOCKHOLM/SHANGHAI, Feb 2 (Reuters) Ericsson's CEO said on Friday he expected China to hold back again this year from issuing licences for high-speed 3G mobile phone networks, though he remained upbeat on prospects for the market.

One analyst concurred with the comments from Ericsson chief executive Carl-Henric Svanberg, though several executives who work with the main four telecoms companies in China disagreed.

The corporate executives who work with the four major telecoms companies still expected licenses this year as the high-speed network had already been built.

Like many other companies in the telecoms equipment business, Ericsson has been waiting for China to push ahead with its 3G network by issuing permits to operators. Expectations have been scaled back as the delay has lengthened.

''We expect not to see 3G licences within this year,'' Svanberg said after Ericsson's quarterly earnings, giving one of the most pessimistic industry views on the China 3G issue.

At stake is an expected billion in network gear spending after the next-generation technology permits are issued.

Svanberg said he expected the Chinese homegrown standard, TD-SCDMA, to have ''headroom'' for large field trials.

However, he saw WCDMA, the most common 3G technology, as the natural follow-up to GSM, on which most mobile phones are based.

''So eventually it (WCDMA) will have a big portion of the 3G roll-out in China,'' he said. The China market would anyway be good this year as the 3G delay had created pent-up demand for GSM expansion.

HOMEGROWN Some executives have hoped Beijing would dish out the first 3G licence as early as February, with the expectation being they would be for the networks to run on the Chinese standard.

This has meant Ericsson, like other global players, has become active in the Chinese standard too.

Hopes China would start issuing the permits grew in early December, with one Chinese official being quoted as saying that the government might issue them ''very soon''.

Florian Pihs, Beijing-based assistant VP at consultancy firm Analysys, said the 3G issue was a guessing game, but the scenario painted by Svanberg was currently the most likely.

This involved expanded trials of the Chinese standard, with no licence issues this year, and maybe none next year either.

''The TDSCMDA trial will be run in an almost commercial way, but there will be no licenses for this trial, and this way the Chinese government gives TDSCDMA more wriggle room to expand.'' REUTERS DKS VV2039