China Mobile's Shanghai branch will invest five billion yuan (US$649 million) to upgrade the local 2G mobile network in 2007 without adding base station numbers.

The city's No. 1 mobile carrier announced the plans during a media briefing over the weekend.

Shanghai Mobile, with more than 13 million users, said it has about 5,000 base stations in the city but the number will not increase.

"Every time we want to establish an outdoor base station, we have to face a flood of complaints from neighbors," said Bu Tong, Shanghai Mobile's director of network division.

The main concern expressed by residents is a belief that the towers will adversely affect their health.

Thus, Shanghai Mobile will improve the technology to make the existing base stations work more efficiently, Bu said.

The carrier's expansion aims to provide data services on the network, which provides Shanghai Mobile with a higher profit margin, industry insiders said.

"China Mobile's data service is lagging behind its arch rival, China Unicom, therefore it has to invest more on the 2G network before the arrival of 3G," said Norson Telecom Consulting, a Beijing-based information technology researcher, in a recent note.

Shanghai Mobile has launched various data services, such as instant messages and handset wallets, which allow users to pay utility bills and buy film tickets through their phones.

In 2006, Shanghai Mobile's data business contributed 25 percent to its total revenue - and it plans to increase this to about 30 percent this year.

Meanwhile, China Mobile will establish high-speed 3G networks in several cities based on home-grown TD-SCDMA (time division-synchronous code division multiple access) technology.

China Mobile will build 400 to 500 outdoor base stations and 800 to 900 indoor stations to cover Shanghai, with each costing 50,000 yuan on average, said Chen Haofei, secretary general of TD-SCDMA Forum.

The 3G base stations are scheduled to be constructed in October, according to equipment maker Alcatel Shanghai Bell.