Sun, May 25, 2008 - Page 11 News List

PRC asks telecoms to join forces to bolster industry

BLOOMBERG

China has asked the nation’s six telecommunication operators to merge their assets to form three conglomerates, part of an industry overhaul to boost competitiveness in the world’s largest telephone market.

China Mobile Communications Corp (中國移動通訊) will take control of fixed-line operator China Tietong Telecommunications Corp (中國鐵通集團), the Ministry of Industry and Information said in a statement on its Web site yesterday.

China Telecom Corp (中國電信), the nation’s biggest fixed-line operator, will gain cellphone assets.

The overhaul will boost earnings for fixed-line companies China Telecom and China Netcom Group Corp (中國網通), which have lost users to the faster-growing mobile market. The reorganization will also increase competition for China Mobile, whose subscribers make up about two-thirds of the country’s total.

Chinese regulators are aiming to provide capital resources to the restructured companies to prepare them for third-generation (3G), high-speed wireless technology that allows faster video and Internet downloads. China Mobile and its rivals need to invest billions of dollars on infrastructure, equipment and handsets for the 3G networks.

Under the proposed plan, China Telecom will acquire a wireless network based on the CDMA, or code division multiple access, from China United Telecommunications Corp (中國聯通), the statement said. China United controls China Unicom Ltd, the smaller operator of the nation’s two cellphone networks.

Unicom’s larger GSM mobile network will merge with the parent of China Netcom, the smaller of the country’s fixed-line carriers, the statement said.

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