I always feel like Charlie Brown lining up to kick the football when it comes to China and CDMA/3G.
online.wsj.com
China Telecom Overhaul Plan
May Come in March
By LORETTA CHAO and JANE SPENCER
February 22, 2008; Page A11
China may unveil long-awaited plans for a restructuring of its massive telecommunications industry as early as next month, state-run radio reported.
If the plan proceeds as outlined in the brief report yesterday, it would consolidate China's six big state-run telecom operators into three, with the surviving entities allowed to offer a full-range of services instead of being divided among fixed-line, mobile and other offerings now.
Such a move, which analysts have been predicting in recent months, also could pave the way for the government to issue licenses for advanced, "third-generation" cellular services -- another long-awaited move that could unlock new orders for global equipment vendors.
The restructuring plan would affect some of the world's biggest listed telecom carriers, including China Mobile Communications Corp., parent of Hong Kong- and New York-listed China Mobile Ltd., which boasts more users than any other wireless operator. The parents of two other listed companies, wireless carrier China Unicom Ltd. and fixed-lined operator China Netcom Group Corp. (Hong Kong) Ltd., would likely be merged, while the parent of China Telecom Corp. would absorb one of two wireless networks now operated by Unicom, the radio report said.
The report, broadcast by Central People's Broadcasting Station, is the first official sign that the industry shake-up may come soon. Although details remain unclear, including how various assets of listed companies will be priced, the report suggests that the government is preparing to go ahead.
Restructuring of the state-owned companies has been long anticipated, and could create stronger competition for China Mobile, which dominates China's wireless sector. The move would give wireless assets to the fixed-line operators, China Netcom and China Telecom, whose businesses have been struggling as consumers flock to cellphones.
The number of Chinese cellphone accounts jumped by 86 million to 547 million in 2007, while the number of fixed-line accounts shrank by 2.3 million to about 365 million, according to the Ministry of Information Industry.
Analysts have said it is possible the restructuring plans would be discussed during the annual session of the National People's Congress, China's legislature, which starts March 5. An announcement could come shortly after the session closes two weeks later, they say.
That could lead later this year to the distribution of licenses for third-generation, or 3G, technology that lets carriers offer high-speed data services to their users. Those licenses have been expected for years, but have met with repeated government delays, in part because China has been trying to develop a homegrown 3G technology to compete with those offered by foreign vendors.
Analysts warn that investors should treat restructuring reports with caution until details are clearer. "The key factors are the selling prices of the networks, and the terms and conditions of the restructuring. Until we know that, it's very difficult to be conclusive" about what it means for outside shareholders, said Allan Ng, an analyst with Bank of China International in Hong Kong.
Mr. Ng argued that other measures, beyond a restructuring, are needed to address problems in the telecom industry, such as putting tighter limits on China Mobile's market share and ensuring equitable connection arrangements among the carriers to boost competition. "I don't think the restructuring in itself will solve the problem," he said.
According to Thursday's radio report, China Mobile Communications would merge with small fixed-line carrier China Tietong Telecommunications Corp. China Telecommunications Corp., parent of China Telecom Corp., would acquire from Unicom parent China United Telecommunications Corp. a wireless network that uses code division multiple access, or CDMA, technology. The remainder of China United, which also owns a network using global system for mobile communications, or GSM, technology, would merge with China Network Communications Group, parent of Netcom. A sixth telecom carrier, China Satellite Communications Corp., would merge into a state-owned aerospace industry group. |
