Thursday, March 17, 2011

Increased CAPEX spending in China

There was a bunch of news today regarding increased spending in China.

1. China Mobile surprised analysts by increasing a level that was 35% higher.

"Soh said she was surprised by the company’s projection, which was 35 percent more than the 98 billion yuan she estimated."

2. "It is reported that for the network upgrade, China Unicom will choose several cities to deploy PTN packet transport network to solve the high-bandwidth needs of 3G wireless backhaul."

Blackmore discussed this last year (or was it at the end of 2009!) that Unicom was behind China Mobile in their PTN deployments. This is a good potential for UT.

3. "China will coordinate the layout of the new generation mobile communication network, next generation Internet, digital radio and television networks, satellite communications and other facilities to form the ultra-high speed, large capacity, highly intelligent national trunk transmission network."

4. "China Telecom has announced its plans to increase its fiber optic broadband service subscriber base to three fold to reach 30 million in fiscal 2011."

"Wang Xiaochu, Chairman of China Telecom commented that China offers a huge market potential for broadband services, as only 23% of Chinese families are using Internet. This plan will offer rich media, 3D and HD IPTV services that need 10 Mb and more bandwidth."

There is a huge amount of buildout going on in China whether its iptv or broadband, or mobile backhaul or new platforms for network convergence. UT has ramped and developed products over the last couple of quarters that they can now sell (as well as being a Chinese company now). It is now very hard to see how UT cannot ramp bookings significantly through this year and stake their position whether its with the 2000 cable operators or the major telecom players or even the enterprise (state grid, transportation, energy customers, etc).

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