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Wed, Jul 07, 2004 - Page 12 News List

Beijing considering telecom merger to speed up 3G efforts


China is mulling plans to merge up to six of its telecoms carriers at parent level to resolve its long-delayed third-generation (3G) mobile-licensing program, state media said yesterday.

The State Council and the state-owned Assets Supervision and Administration Commission (SASAC) -- the ultimate controlling shareholders of China's telecoms groups -- were reviewing two proposals, the Beijing News said.

In one, China Mobile Communications Group would be merged with fixed-line operator China Network Communications Group and China Telecommunications Group with China United Telecommunications Group.

The other plan involves merging China Mobile with China Satellite Communications, China Network with China United and China Telecommunications with China Railway Communications, the report said.

Hong Kong's South China Morning Post also reported the State Council was considering merging the four companies, citing two senior executives from separate mainland operators.

China Mobile recently denied the merger plan, saying it had not been informed of the proposal.

The executives quoted in the Post said the government was convinced the merger plan could resolve the 3G licence problem as only two next-generation mobile licenses would be needed instead of four.

"The four carriers are owned by SASAC, if four 3G licenses were issued and all four build their 3G networks, it will not only create investment overlapping but too much competition," one executive said.

By merging the carriers at parent level, Beijing hopes to reduce the complexity and level of disruption to the listed arms of the four operators, an executive quoted by the Post said. He said the plan would require the ministry to grant only two licenses, while the listed vehicles would remain intact.

Other industry sources said the chances of such a merger materializing were 50-50.

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