China mulls mobile merger

7 Jul 2004

Reports in the international press suggest that China’s State Council and the Assets Supervision and Administration Commission (SASAC) – the ultimate controlling shareholders of China’s telecoms groups – are reviewing two proposals to merge up to six of its telecoms carriers to resolve a long-delayed 3G licensing programme. Under the first, China Mobile Communications Group (China Mobile) would be merged with fixed line operator China Network Communications Group (China Netcom), while China Telecommunications Group (China Telecom) would tie-up with China United Telecommunications Group (China Unicom). The other plan involves merging China Mobile with China Satellite Communications, China Netcom with China Unicom and China Telecom with China Railway Communications.

According to the South China Morning Post, the Chinese administration is convinced that a merger plan would answer concerns that awarding four 3G networks – expected to be issued to China Mobile, China Netcom, China Telecom and China Unicom – would be excessive. Some government officials believe two licences would be preferable, avoiding ‘too much competition’ and ‘investment overlapping’. By merging the carriers at parent level, Beijing hopes to reduce the complexity and level of disruption to the listed arms of the four principal telcos.

In a separate but related story, China Mobile has awarded Siemens a USD41 million contract for the expansion of its network in the Anhui Province. The deal will add capacity for in excess of one million new subscribers. Work is expected to be completed by the end of the year.

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