China Unicom sues rival in mobile price
battle
By Matt Pottinger, Reuters
07 June 2000
China's number two phone company, China United Telecommunications, is suing
state giant China Mobile Communications Corp for unfair competition,
foreshadowing the possibility of a broader price war between the rivals.
A China Unicom official said on Wednesday the company would allege that China
Mobile has been offering illegal discounts on cellular phone services to
subscribers in the central province of Jiangxi who switch from China Unicom.
The Intermediate People's Court in Nanchang had agreed to hear the case as
early as this month, said the official, who gave only his surname, Zhang.
China Unicom is the parent of China Unicom Ltd, which is launching an initial
public offering in Hong Kong and New York this month expected to raise as much
as US$5.26 billion. China Unicom's Jiangxi network is not included in the overseas
listing.
The long anticipated listing will provide foreign investors with an alternative vehicle
for tapping China's booming mobile service market.
China Telecom (Hong Kong) - which is majority owned by China Mobile - is the
only mainland mobile phone company in which foreigners may legally invest.
China Telecom, whose shares fell about three percent on Wednesday to
HK$63.75, has enjoyed lofty valuations as the main mobile phone provider in the
mainland Chinese market, which is expected to grow this year to more than 60
million subscribers.
But China Unicom has converted itself over the past two years from a
poorly-funded pipsqueak into a market contender that now claims roughly 12
percent of all subscribers, sparking an increasingly competitive battle with China
Mobile.
China Unicom is alleging that in Jiangxi, China Mobile was offering mobile users
free service connections and discounted call rates if they hand over their Unicom
SIM cards, Zhang said from the Jiangxi city of Nanchang.
The company was also seeking 16 million yuan ($1.93 million) in lost business,
unspecified legal fees and a public apology, he said.
China Mobile officials in Jiangxi were unavailable for comment.
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