Interconnection rate change to save China Telecom CNY3bn a year

24 Dec 2013

CDMA operator China Telecom, the third largest cellco in the country, expects to save an estimated CNY3.14 billion (USD513.14 million) annually following a reduction in wholesale network termination fees the provider pays to China Mobile. According to Bloomberg, which cites a notice to the Hong Kong Stock Exchange, Telecom will reduce the amount it pays to interconnect with its larger rival from CNY0.06 per minute to CNY0.04 per minute for calls, with the termination rate for SMS falling from CNY0.03 to CNY0.01. The drop in fees is also expected to lead to a reduction in revenues of around CNY560 million, however.

The fee reduction is the latest measure from sector regulator the Ministry of Industry and Information Technology (MIIT) to compel the nation’s trio of cellcos to cut prices and improve customer service.