China Telecom faces end of monopoly
Date: 11/29/1998
Page: 1
Author: Zhou Kan
China Telecom, one of the country's most profitable national companies, is facing a historic breakup that will change the face of China's telecommunications industry.
According to an official from the Ministry of Information Industry (MII), the watchdog of the country's telecom industry, the process of amending the plan for the long-awaited restructuring is being accelerated.
The ending of the State monopoly in the telecommunications sector would bring business opportunities for foreign companies, experts said.
However, the emergence of these opportunities is likely to be tied to China's efforts to accede to the World Trade Organization (WTO).
The final plan concerning the reform is pending approval from the State Council. MII has submitted several such plans to the State Council, but none has been fully accepted.
There is no a timetable for the reform. "But in our opinion, the sooner the better," said the official, who declined to elaborate on the plan.
A lot of surmises about the reform of China Telecom have been made both at home and abroad. Some say the company will be divided into several independent companies according to business or geographical areas. Or certain businesses within China Telecom are predicted to be cut out.
Calls for reform became louder in the wake of the restructuring of ministerial institutions this spring. The central government decided to withdraw from the administration of China Telecom and make it a pure business.
However, that marked only the start of the reform of China's telecom industry.
Chinese people's spending on communications has been climbing in recent years. And complaints about telecom services are rising as well. The media and consumers have attributed this to the monopoly of China Telecom.
China Telecom conducts business in local and long-distance calls, mobile communications, paging services, and data communications. Total telecom turnover was 163.4 billion yuan (US$19.7 billion) last year.
Its only competitor _ China Unicom, established in 1994 _ operates only mobile, paging, and very limited local call business.
Partly due to China Telecom's overwhelming monopoly strength, China Unicom has not developed as had been hoped. Its mobile phone subscribers are less than 1/20 the number of China Telecom's.
With no hope of building a true competitor to China Telecom at home, and an unwillingness to invite foreign companies to enter the market at present, the government is left with only one choice _ reforming China Telecom.
The MII official said the reform is aimed at introducing competition to the Chinese telecom market and enhancing the capability of China's telecom operators.
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