Updated from 9:54 a.m. EST

China Telecom

(CHA) - Get Report

has picked

Motorola

( MOT) as a key supplier of its next-generation wireless infrastructure, according to a report.

Motorola will help China Telecom upgrade its CDMA network infrastructure to include broadband data capability and advanced multi-media services, according to

ChinaTechNews.com

. The new equipment should facilitate advanced data transfers allowing for video streaming and music downloads to wireless subscribers in China.

The equipment will be installed in early 2009 and is part of a larger project to upgrade China Telecom's entire nationwide CDMA network to next-generation capability, according to the report. Additionally, the installation of this new equipment will expand China Telecom's coverage footprint and replace older equipment in markets where Motorola network gear has been operating for many years.

In May, Chinese officials announced a plan to merge six state-owned phone providers into three in a move designed to offer more competition for

China Mobile

(CHL) - Get Report

, which has the largest subscriber count in the world with nearly 400 million.

Three 3G spectrum licenses have been pinned to the merged companies once the restructuring is completed: wideband code division multiple access (WCDMA), time division synchronous code division multiple access (TD-SCDMA), and standard CDMA.

Since the reshuffling was originally announced, China Telecom has acquired CDMA licenses from

China Unicom

(CHU) - Get Report

. Following that transaction, China Unicom merged with

China Netcom

(CN) - Get Report

in a deal worth $24 billion, with the combined company set to build out a 3G network based on WCDMA technology. China Mobile, meanwhile, is committed to operating a TD-SCDMA network.

China Telecom's decision is a shred of much-needed good news for Motorola, which has struggled as handset competition has intensified and as its RAZR phone has fallen out of fashion. In March, the company announced it would seek to splinter off its troubled handset unit. Two months ago, Motorola said it would split its home and networks mobility segment into three new units, which will be broadband home solutions, broadband access solutions and cellular networks.

Recently, Standard & Poor's cut its long-term credit rating on Motorola to

junk status

. The company also said it is permanently freezing its

U.S. pension plans

and temporarily suspending matching contributions to employee 401(k) plans as part of its bid to cut costs.

Shares of Motorola ended Monday's trading session down 4 cents, or about 1%, at $4.05.

Qualcomm

(QCOM) - Get Report

, which is largely expected to benefit from China's migration to

3G wireless technology

, lost 1% to $34.10.