The economic downturn, coupled with the dramatic increase in capital expenditure and intensifying competition, means China's telecom industry is now on a downward spiral despite the arrival of the long-anticipated 3G-era, analysts said.

China Unicom, the country's second biggest mobile carrier, is scheduled to launch its 3G trials from May 17, the World Telecommunication Day, signaling the full arrival of China's 3G era. Its two rivals, China Telecom and China Mobile, have already launched 3G trial services in the country.

"The introduction of 3G services (in China) will not give the telecom carriers a big boost, as global experiences show that 3G has not been very helpful in driving business growth," said Wang Jinjin, a telecom industry analyst with UBS.