Beijing - China on Wednesday agreed to begin issuing licences for third-generation, or 3G, high-speed mobile telephone networks, state media said.

The State Council, or cabinet, said it took the decision because "conditions for handing out the licenses were mature," the official Xinhua news agency reported.

The issue of 3G licences is expected to spur an investment spree and fierce competition for customers between three major network operators next year.

The 3G networks will be based on a Chinese TD-SCDMA (Time Division Synchronous Code Division Multiple Access) system, as well as the European WCDMA and North American CDMA 2000 systems, the agency said.

Li Yizhong, minister of Industry and Information Technology, said earlier this month that he expected China's three telecom operators to invest 280 billion yuan (41 billion dollars) in 3G infrastructure projects over the next two years, including at least 200 billion yuan in 2009.

China's telecom business volume and revenue were expected to increase next year by 15 per cent and 6 per cent, respectively, state media quoted Li as saying.

China Mobile, the country's biggest carrier, will be granted a licence for TD-SCDMA, while the smaller China Unicom will operate a WCDMA network.

China Telecom will be allowed to branch out from its fixed-line business and compete for 3G customers with a CDMA 2000 system, earlier reports said.

China Mobile said recently that it planned to build an extra 100,000 base stations, adding to its current 40,000 stations, by 2011 to speed up its TD-SCDMA network for 3G services.

China is the largest mobile telephone market in the world, with more than 600 million users. (dpa)