China considers Unicom/Telecom merger

5 Sep 2018

China is considering merging China Unicom and China Telecom, two of the nation’s ‘big three’ telecom providers in a bid to hasten 5G technology development, Bloomberg quotes people familiar with the matter as saying. According to the unnamed sources, the proposal under consideration argued that combining the two state-backed firms – which represent a combined total of 583.6 million mobile subscribers (39.2% of the market) and 219.5 million fixed broadband subscribers (58.1%) – would allow the government to accelerate 5G development as a single company would be able to more easily invest in the new systems. No decision has been reached, though, and the merger may not happen, the sources added. Telecom and Unicom have both dismissed speculation of a tie-up, saying that they were not aware of any merger plans.

A potential merger of the two telcos has been considered by Beijing in the past as a possible means to tackle China Mobile’s dominance in the wireless segment, but the recent reconsideration of such plans has reportedly been driven by escalating tensions with the US over trade, the sources said, highlighting recent international clashes over the activities of Chinese vendors ZTE and Huawei. Whilst a tie-up may grant China greater influence over 5G standards-setting, it would likely come at the cost of narrowing competition in its domestic telecoms markets by establishing a duopoly.

China, China Mobile, China Telecom Corporation, China Unicom, CM TieTong (previously China TieTong [CTT])