<p>April 2009 – 3G launches<br/>China 3G business is expanding and has intensified competition. We<br/>contacted customer service operators in Shanghai, Beijing, Nanjing<br/>and Guangzhou to get an update on competition. Operators have<br/>started launching their 3G products. China Unicom (CU) recently<br/>launched its 3G brand, “Wo”, but initial promotion was disappointing.<br/>The rumored 3G pricing plans were expensive with no handset<br/>subsidies. China Mobile (CM) hasn’t made much progress in sourcing<br/>TD handsets, but has launched 29 TD-enabled netbooks to boost TD<br/>growth. Their focus is still on 2G. China Telecom (CT) continues to<br/>improve CDMA handset supply with 108 2G and 6-12 3G handset<br/>models. CT’s subs growth momentum should continue. Maintain OPF<br/>on CT and U-PF on CM and CU.<br/>China Telecom: Improving handsets supply<br/>CT has made good progress on CDMA handset supply. We found a total<br/>of 108 CDMA 1x handsets in their online stores, adding 38 new models<br/>last month. Their local stores also confirmed that most of the handsets<br/>that we found online are available. This is a stark contrast to only ~20<br/>handset models that we found in their Guangzhou and Shenzhen stores<br/>in Feb.<br/>Most of new CDMA handsets are still from local brands, but foreign<br/>handset models are also increasing. Out of the 108 CDMA 1x handsets,<br/>only 23 models are from the popular foreign brands (2 from Motorola, 3<br/>from Nokia, 7 from LG and 11 from Samsung). Nokia is committed to<br/>delivering 8 CDMA handsets this year.<br/>Selection of CDMA EVDO handsets has also improved though still limited.<br/>CT added 5 new CDMA EV-DO handsets last month and plans to launch<br/>another 6 new models soon. Most of handsets come from LG and<br/>Samsung. The company expects to have 30 EV-DO handsets by July.<br/>The launch of EV-DO handsets have been delayed as company needs to<br/>modify the handsets with detachable SIM cards and data platform.</p><p></p><p> <br/></p><p></p>