Dow Jones Newswires
HONG KONG -- The Chinese government is finalizing a plan to break up the China Telecom group into four business units, in a bid to introduce competition into the country's telecommunication industry, a local newspaper reported Wednesday.
The Chinese-language Hong Kong Economic Times quoted unnamed sources as saying China's State Council, or cabinet, has tentatively approved a plan to strip China Telecom's virtual monopoly by creating four separate companies for fixed line, mobile, satellite and paging businesses.
The new paging company will seek to list Class A shares on the Mainland, according to the paper. A shares are only traded by domestic investors.
International investors, meanwhile, are waiting to find out how the restructuring will affect Hong Kong-listed China Telecom (Hong Kong) Ltd. (CHL), which is controlled by the Beijing-based China Telecom group, a business arm of China's Ministry of Information Industry.
The Ministry is considering a plan to merge the Hong Kong-listed unit with the newly created mobile company, according to the paper.
Previous media reports said Beijing was also considering an alternative proposal similar to the Baby Bell approach in the U.S., that is to split the telecom giant by geographic locations.
Analysts said the business line breakup will prove more beneficial for the China Telecom (HK). They added the consolidation are likely to bring long-term benefits by creating new opportunities for the company to acquire more mainland networks.
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