Mobile operator China Unicom launched a second network based on the CDMA standard (used mostly in the US and some Far Eastern countries) earlier this month, alongside its existing GSM network. This surprised many in the industry, since CDMA and GSM are rival standards with extremely similar capabilities.
Morgan Stanley is certainly unconvinced of the wisdom of China Unicom’s move: it expects CDMA subscribers to bring in lower average revenues than the company’s existing customers.
Industry rumors hold it that the partially privatized company’s move has more to do with trade diplomacy than business logic: the US’ Qualcomm controls the CDMA standard, and strengthening Chinese/US business relations is an important goal for Beijing.
