China telecom shuffle puts Nortel in catbird seat

China's major telecom realignment has put Canada's Nortel Networks in a position to finally pull out of the doldrums that have plagued it in recent months, Paradigm Capital analyst Barry Richards told the Ottawa Citizen.

China's second-largest fixed-line operator, China Netcom Group, and its second-largest cellular carrier, China Unicom Ltd., are set to merge under China Unicom's logo Oct. 15. Between them, they have 279 million customers. Both are Nortel customers and are upgrading from second to 3G and 4G technology. Unicom plans to spend $14.6 billion over the next two years upgrading to a 3G wireless network.

"This is a glorious opportunity for Nortel, already a supplier to both China Unicom and China Telecom," Richards said. "Overall, China has the potential to pull Nortel's business and its stock out of its long-term funk, and we believe they are well positioned to exploit that market."

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