Friday, July 29, 2005

Chinese Telecom Sector Restructuring Rumours

From Financial Times: Rumours highlight uncertainty over 3G

"Investors in Chinese telecommunications stocks have been biting their nails this week as they await the dawning of Monday, August 1, when, according to a barrage of internet-fuelled rumours, Beijing will announce a major restructuring of the sector."

"Even though the state body that controls China's four big foreign-listed telephone companies has expressed ignorance of any such plan and the operator most affected has denied its existence, the rumours have highlighted expectations that Beijing is preparing for action."

"According to the most popular speculation of sectoral restructuring, Beijing will break up China Unicom, the country's second-largest mobile operator, and transfer its two wireless networks to Telecom and Netcom."

"Dividing China Unicom between Telecom and Netcom would immediately create stronger competition in wireless services for the dominant China Mobile, while also ending the strange situation of one company operating two networks based on different technical standards.
“I think this is the best plan because China only needs three telecom groups. There is too much competition already and Unicom is the weakest link,” said Daiwa's Mr Koh."


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