CHINA Academy of Telecommunication Technology (CATT) is selling a 13-percent stake of Datang, the leading China's 3G technology firm, for one billion yuan (US$133 million) to fill the capital shortage.

CATT said it requires potential buyers to have strong financial abilities and wants to secure a deal that is beneficial for Datang Mobile's future development.

CATT is entitled to stop the stake transfer if the transaction can't be done before December 31, 2007, according to a statement at the Shanghai United Assets and Equity Exchange.

Datang Mobile, a subsidiary of Datang Telecom Technology and Industry Group, is a major proponent of China's TD-SCDMA (time division-synchronous code division multiple access) standard and it develops and manufactures network equipment and mobile phones.

In 2006, Datang Mobile's revenue was 128 million yuan, and it lost 113 million yuan, compared with a loss of 26.74 million yuan in 2005.

"TD-SCDMA is the last hope for Datang Group, otherwise it is over," said Sandy Shen, a Gartner analyst based in Shanghai. "It often takes one or two years for a new 3G network to gain profit so the investment in Datang Mobile faced uncertain risk."

China, however, has no timetable to issue the long-awaited 3G licenses.

Datang Mobile, which CATT and Alcatel Shanghai Bell have stakes in now, may have found new investors and may be brewing plans for getting listed, industry insiders said.

People's Insurance Company (Group) of China (PICC) may spend 1.5 billion yuan to acquire a 15-percent stake of Datang Mobile. China Yangtze Power Co, China Life Insurance and Ping'an Insurance also intended to spend about one billion yuan each to have Datang Mobile's stake.