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Technology Stocks : Qualcomm Moderated Thread - please read rules before posting -- Ignore unavailable to you. Want to Upgrade?

To: foundation who wrote (5163)	12/3/2000 9:48:39 PM
From: nbfm	Read Replies (1) \| Respond to of 197443

i think that the china railways license is for fixed line. China rail ministry to launch major phone firm By Matt Pottinger BEIJING, Dec 3 (Reuters) - China's Ministry of Railways has been awarded a license to turn its internal telecoms network into a nation-wide commercial system that will compete with state phone giant China Telecom, ministry officials said on Sunday. The network spanning 120,000 km (75,000 miles) and 500 cities is slated to merge after three years with mobile operator China Unicom Group, said Zhu Rongzhu, acting deputy general manager of the railway network. It will be the sixth licensed telecom company in China, adding competition to the rapidly-growing market ahead of China's entry to the World Trade Organisation. China Telecom now faces a challenge to its reign over the fixed-line phone business just as it gears up for a listing on the New York Stock Exchange next year. The former state monopoly has already been forced to spin off its mobile, paging and satellite services under a government-mandated restructuring begun in 1998, and depends on steep long-distance fees for its revenues. China Railway Telecom, known as Railcom, already provides free phone service to one million people, mostly railway workers and their families, Zhu told Reuters. It also has two million pager users. Now the company, majority-owned by the ministry, has a green light to start charging fees for fixed-line phone and data transmission and Internet services by the end of the year -- and at rates that will undercut China Telecom, he said. "The country adopts different pricing policies for dominant telecoms providers and newly established ones," he said. "Railcom is a newly established one." VALUABLE FRANCHISE The China Daily Business Weekly said Railcom's network was worth about 10 billion yuan ($1.2 billion), and included 40,000 km of optic fibre. Zhu SAID Railcom would be limited to local and domestic long-distance calls. "International long-distance will still be China Telecom's domain," he said. Railcom also would stay out of mobile phone service, diminishing the competitive threat to wireless providers China Mobile (Hong Kong) Ltd (0941.HK) and Unicom's Hong Kong-listed wing China Unicom Ltd (0762.HK). "After three years we will carry out a merger with China Unicom," Zhu said. But Wang Jianzhou, Unicom Group's Executive Vice President, said a merger with Railcom was still under discussion. "According to my understanding, there have been discussions on combining the two networks, but there is no final decision," he said. Such a move would significantly boost Unicom Group's fixed-line operations, which are now confined to only a handful of cities and offer little competition to China Telecom. Whether such a merger will come off is open to question. Three years is a long time in China's rapidly shifting telecoms landscape, and regulatory, technological and other changes could make a merger unattractive down the line. China's State Council, or cabinet, initiated plans in late 1999 for Unicom to take over the railway network, but the move was delayed partly because of the administrative complexity of a marriage, analysts said. Railcom, for instance, has 65,000 employees -- more than three times as many as China Unicom. Railcom also lacks a billing service since its existing customers do not pay. The Railway Ministry has long posed a challenge to China Telecom. According to Zhu, it still owns a stake it took at the launch of China Unicom in 1994, and also owns 25 percent of China Netcom Corp. 06:18 12-03-00 Copyright 2000 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. All active hyperlinks have been inserted by AOL.