UPDATE 1-China says approves issuance of 3G licences

(Adds background, analyst comments)

By Kirby Chien and Michael Wei

BEIJING, Dec 31 (Reuters) - China's state council, or cabinet, said on Wednesday it had approved the issuance of long-awaited licences for next generation (3G) mobile networks, opening the door to $41 billion in spending for equipment.

The council did not say when the licences would be issued by the Ministry of Industry of Information, but the industry minister has said it would happen by early 2009.

China has repeatedly delayed awarding the licences while it worked on the broader task of reorganising its telecoms industry, a task it began earlier this year.

As part of that reorganisation, the ministry has said China Mobile (0941.HK) would be awarded a licence for a TD-SCDMA network, a standard backed by Beijing.

In addition, China Unicom (0762.HK) would be awarded a licence for WCDMA and China Telecom (0728.HK) for CDMA 2000.

WCDMA and CDMA 2000 are globally accepted standards, but the foreign firms that control these technologies also charge hefty royalties, something Beijing aggressively tries to avoid.

The new technology handles faster data downloads, allowing cellphone users to make video calls and watch TV programmes.