China Mobile says 3G rollout as bad as expected

BEIJING, July 22 (Reuters) - China Mobile (0941.HK), the world's largest wireless carrier, said users have been slow to accept its initial rollout of 3G services under a domestically developed standard, although the company had been able to meet its low subscriber expectations.

"This year the company will meet its targets because at the end of last year we had expected things to be bad," Lu Xiangdong, a company executive vice-president, told Reuters on Wednesday. "So our targets were rather low."

However, the official Shanghai Securities News reported that China Mobile and rival China Telecom (0728.HK) would fall far short of their 3G subscriber targets for 2009.

The newspaper said China Mobile had at the beginning of the year set a target of 10 million 3G subscribers for 2009, but due to poor results from initial tests with netbooks, the company had slashed the target to 3 million.

Asked whether the company could sign up 3 million subscribers for its TD-SCDMA standard, a technology developed in China and supported strongly by Beijing, Lu said, "We'll try our best ... Networks require time to build and to improve. Once subscribers see the service is good, the market will get better."

He added that the company had 1.2 million 3G subscribers in 40 Chinese cities.

A principal marketing point for 3G services in China has been enhanced performance with netbooks, inexpensive PCs designed primarily to access the Internet.

Citing an an analyst, the report said China Mobile was facing obstacles because of the immature nature of the homegrown standard and a lack of compatible equipment such as cellphones and netbooks.

Most international manufacturers make products compatible with the globally accepted 3G standards, CDMA2000 and WCDMA, and have been reluctant to redesign established products specifically for TD and China Mobile.

As a newcomer to the wireless market, China Telecom, which operates the CDMA2000 standard, had attracted only 100,000 3G subscribers to date, far short of the 20 million it had originally targetted for 2009, said the newspaper.

China Unicom (0762.HK), which uses the mature WCDMA standard, signed up 470,000 subscribers in the second quarter, taking market share from China Mobile.

China Unicom was still working throuhg its merger with now-defunct China Netcom, indicating that all three carriers were looking forward to more stable operations in 2010.

However, compounding the challenges facing China's carriers is that they are introducing 3G services more than a decade after more developed markets, which are now moving toward more advanced 4G services. ($=6.83 yuan) (Writing by Kirby Chien; Editing by Chris Lewis)