Wednesday, January 6th, 2010
China Tel Group's International Bet on WiMAX
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China Tel Group, Inc. (OTC:CHTL) is making a bet similar to Clearwire Corporation (NASDAQ:CLWR) and Sprint Nextel Corporation (NYSE:S) as it continues to acquire and develop WiMAX networks in key markets throughout the world.
WiMAX and Its Promising Potential
WiMAX is a wireless digital communications system, also known as IEEE 802.16, that is designed for wireless metropolitan area networks. The technology can provide broadband access up to 30 miles for fixed stations and 3-10 miles for mobile stations, which compares to just 100-300 feet for WiFi/802.11 wireless local area networks.
Since the WiMAX network operates on both licensed and non-licensed frequencies, providing a regulated environment and variable economic model for wireless carriers. Meanwhile, the technology adheres to standards (IEEE 802.16) that allow it to be used in much the same way as the ubiquitous WiFi protocol that is now in place.
China Tel Brings WiMAX to the World
China Tel Group was created through a merger with Trussnet USA and Wholly Owned Foreign Enterprises (WOFE) in the People’s Republic of China to acquire and operate WiMAX networks in key markets throughout the world. Currently, the company is building networks in China, with plans to expand into Argentina and Peru as well.
China Tel signed an agreement to be the capital and technology partner for the build-out of WiMAX networks in China with Chinacomm – a Chinese government approved and licensed 3.5G operator in 29 domestic top tier cities covering 300 million in population and 50% of the overall GDP of the country as a whole – in exchange for a 49% equity interest in the venture.
A Huge Potential Market…
The market for WiMAX within China is expected to grow almost 7-fold between 2009 and 2011, with the market expected to reach 8.39 million users by the end of that range. Meanwhile, China surpassed the U.S. to become the world’s largest mobile handset market in 2007, with demand for handsets in 2008 reaching over 200 million.
In a separate report by the Taiwan government-sponsored Market Intelligence Center, the WiMAX market in China is expected to grow to $9 billion in 2012 from $2 billion at the end of 2008. This could spell substantial opportunities for China Tel, particularly as the Chinese government regulates which companies control which regions of the country’s telecom network.
The Takeaway…
- China Tel Group plans on bringing WiMAX’s powerful technology to one of the fastest growing and largest markets in the world in China.
- The Chinese government has granted China Tel’s partner, Chinacomm, exclusive WiMAX access to a population that controls 50% of the country’s GDP.
- WiMAX growth in China is expected to reach more than $9 billion by 2012 as consumers continue to rapidly adopt the technology.
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-- Written by Simon Monger
