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Cloud Call Center Community Featured Article

TMCNet: China takes first step in restructuring telecoms industry with China Mobile merger

[May 23, 2008]

China takes first step in restructuring telecoms industry with China Mobile merger

(Associated Press WorldStream Via Acquire Media NewsEdge) BEIJING_China's biggest mobile phone company will take over a smaller fixed-line carrier, a state news agency said Friday, in what was expected to be the start of a sweeping industry restructuring.


China Mobile Communications Corp. will acquire China Railway Communication, also known as Tietong, the Xinhua News Agency said, citing information from state-owned China Mobile.

Regulators are believed to be preparing a series of mergers that will link up China's fast-growing mobile carriers with fixed-line partners to invigorate competition. Fixed-line carriers have seen demand slump as new customers opt for mobile service.

"The long-awaited restructuring of the Chinese telecoms market appears closer than ever before," Jing Li, a China telecoms analyst for the consulting firm Global Insight, said in a report to clients.

An industry-wide plan might be released as early as this weekend, Li said.

"A successful restructuring will undoubtedly spur competition in the market as the resultant telecoms players square up to each other," Li said.

The overhaul also is expected to affect China's biggest fixed-line carrier, China Telecom Corp., and its smaller rival, China Netcom Group Corp., as well as No. 2 mobile operator China Unicom Ltd.

In Hong Kong, trading in China Netcom and China Unicom shares was suspended pending a "price-sensitive" announcement. Trading in China Unicom shares was suspended in Shanghai.

There was no indication how long the suspensions would last.

China has the world's biggest population of mobile phone users, with some 520 million accounts, and the government says that should reach 600 million soon.

Mobile carriers say their numbers of new accounts are growing at double-digit rates, while fixed-line carriers say their subscriber numbers are flat or falling.

China Telecom and China Netcom have tried to boost revenues by promoting broadband Internet, Web-based cable TV and other services but earnings still are growing more slowly than at mobile carriers.

Beijing is preparing to roll out third-generation, or 3G, service that will support video, Web access and other services. That is expected to boost revenues further for mobile companies as it opens up opportunities for new services.

Copyright ? 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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