Alcatel has earmarked 100 million dollars for research and development in China, with an additional 45 million dollars for networking systems for third-generation (3G) mobile technology, Alcatel Asia-Pacific president Christian Reinaudo said at press briefing.

The Paris-based company, which is trying to bounce back after a major overhaul of its operations, has not posted a net profit since 2000 but saw global sales last year of 12.5 billion euros (15.2 billion dollars).

China's fast developing economy has been a bright spot for the company, however, with mainland sales worth about one billion euros or about half of its Asia-Pacific turnover.

The region accounts for 18 percent of the company's global revenue and Alcatel's China business, namely Alcatel Shanghai Bell, contributed some 150 to 200 million euros in exports and was expected to become a major platform for further exports, Reinaudo said.

"The business in China is not only profitable but one of the most profitable units of Alcatel," he said.

Like other network providers such as Germany's Siemens and Canada's Nortel, Alcatel has suffered greatly from the global downturn in the telecommunications industry.

Discussions with an undisclosed Chinese partner to sell off its loss-making handset unit are ongoing, Reinaudo said.

"We are progressing," he said. "It will be a clean thing."

Alcatel's net loss last year came to 1.94 billion euros after a loss of 4.74 billion euros in 2002.

Reinaudo said he remained confident that the fast pace of growth in the region and especially in China, the world's largest mobile market, and where the company has invested more than one billion euros, would pay off.

The company is also in talks with Datang Mobile Communications Equipment Co. about cooperation in developing TD-SCDMA, the Chinese standard for 3G technology.

To lift the company back to profitability Alcaltel is betting on maintaining its lead as a provider of broadband networks, both fixed and mobile, voice switching and systems to support mobile protocols that can integrate future 3G mobile data applications.

SPACE.WIRE