China Mobile 3G just for select cities 

China Mobile's 3G strategy is to target "larger cities and commercial districts," chairman Wang Jianzhou was quoted by mainland media as saying Tuesday.

Third-generation users will still have access to slower 2G networks in areas with no 3G coverage through the use of dual-mode handsets, Wang said.

"The capital spending [on 3G] isn't going to be the tens of billions [of US dollars] that people have bandied around," said Duncan Clark, Beijing- based managing director for telecoms consultancy BDA China.

Mainland telecom operators are currently awaiting the distribution of 3G licenses by the central government before commencing network construction. The licensing of 3G services is now likely to be delayed to next year as the government deliberates on which 3G standards will be adopted, experts say.

The government is widely expected to award 3G licenses to fixed-line operators, China Telecom (0728), and China Netcom (0906), in addition to current cellular market incumbents, China Mobile and China Unicom (0762).

China Netcom said last month it plans to spend 80 billion yuan (HK$78.2 billion) to 100 billion yuan to roll out 3G services, though for China Mobile it is likely to cost less, said Clark

"China Mobile already has an existing network, but [the new players] have to build new greenfield networks and deploy from scratch," Clark said. "However, the eventual costs will depend on the extent of the rollout and the 3G standards chosen."

China Mobile said it will increase capital expenditure this year by 16 percent to 83.3 billion yuan.

The figure does not include any spending on 3G. The firm needs to keep up its investments to support continuing growth in the 2G business, which added 30.3 million new subscribers in the first seven months of this year, boosting the total user- base to 278.3 million.

The strong customer growth drove a 25.5 percent increase in China Mobile's first-half net profit to 30.8 billion yuan.