UPDATE 1-China telcos, gear makers soar after 3G approval

(Updates with comments, details)

By Parvathy Ullatil and Joanne Chiu

HONG KONG, Jan 2 (Reuters) - Shares in Chinese telecom firms surged on Friday after Beijing finally approved the issuance of licences for new mobile networks, ushering in billions of dollars in infrastructure spending and the prospect of fresh revenue streams from new 3G services.

With an estimated $41 billion in spending needed to roll out the new networks, telecommunications equipment makers, such as ZTE (0763.HK), led the gains.

Mobile service providers China Mobile (0941.HK), China Unicom (0762.HK) and China Telecom (0728.HK) also rose on expectations the new technology, allowing services such as video and mapping on mobile phones, will attract more higher spending customers.

"The investments will pay off eventually and 3G is definitely the direction they (Chinese telecom companies) have to move in," said Alex Tang, research director with Core Pacific-Yamaichi International.

"Basically the announcement removes a big element of uncertainty over when these licences will be granted."

China's state council said on Wednesday it had approved the issuance of the licences as part of sweeping restructuring of the industry. No date has been set but licences are expected early this year. [ID:nPEK179472]

Analysts said Beijing's restructuring also allowed the service providers access to the new technology at relatively low investment risk.