China announces telecom industry restructuring plan – from 6 to 3
The MII (Ministry of Information Industry), NDRC (National Development and Reform Commission), and MOF (Ministry of Finance) of China jointly issued “The Announcement on Deepening the Reform of the Structure of the Telecommunications Sector”.
The key points are:
1. The statement “encourages”
a. China Telecom to acquire CDMA business of China Unicom (including network asset and customers);
b. China Unicom and China Netcom to merge together
c. The basic telecom service of China Satellite to be merged into China Telecom
d. China Tietong (the third fixed-line operator following China Telecom and China Netcom) to become a wholly owned subsidiary of China Mobile Group
2. The statement urges all the six telecom operators in China (China Telecom, China Netcom, China Mobile, China Unicom, China Satellite, and China Tietong) to submit accordingly the formal reform plan to the related organizations.
3. 3G licenses will be released after the re-organization.
As a result, six operators (China Telecom, China Netcom, China Mobile, China Unicom, China Satellite, and China Tietong) will become three (China Telecom, China Unicom, and China Mobile).
There will be three 3G licenses issued (CDMA 2000, WCDMA, TD-SCDMA) for three operators (China Telecom, China Unicom, and China Mobile).
All the three new operators will be realizing their dream of providing fixed-line and mobile integrated services. China Telecom (#1 fixed-line operator in the world in terms of subscribers) will obtain the mobile license which they have waited for years, as well as China Netcom, despite the loss of its name to China Unicom.
Capital markets went up on May 23 for all carriers except China Mobile, who ends up with more competition.
China Mobile (HKSE: 0941) 125.2 HK$, -3.76%
China Unicom (HKSE: 0762) 18.48 HK$, +11.8%
China Telecom (HKSE: 0728) 5.67 HK$, +6.98%
China Netcom (HKSE: 906) 27 HK$, +12.5%
Obviously, the purpose of this new round of restructuring of industry is to enhance the market competition, or directly saying to weaken the too strong position of China Mobile. Since 2004 different versions of the restructuring plans have been rumored in the industry and the actual decision has been delayed for years along with the formal issuance of 3G licenses.
Will this restructuring be enough to foster competition while from 2004 to 2007 China Mobile’s subscribers grew two times from 200 million to 400 million. How can China Unicom and China Telecom compete with China Mobile which has already such a strong position?
This will be part of the discussion of Mobile Monday Beijing’s “The Long March to 3G” on Monday 26 @ Block8.
[...] Update: the Chinese government just announced its guidelines for telecom sector restructuring and the 3G licenses issuance to follow. Find out more on +8* and during the panel tonight!. [...]
[...] By now most of you have probably read or heard the broad outlines of the long-expected reorganization of the Chinese telecoms sector. After years of the rumor mill churning out every mathematically conceivable permutation by which China’s four major and two minor operators could be reduced to a more manageable number, the MII, the NDRC, and the MOF have made official the what’s been more or less common knowledge within the industry since late 2007. The best summary of it that I’ve seen in English is at Plus8Star, and I suggest that you head over there to read Benjamin Joffe’s take on this. [...]
[...] Update: the Chinese government just announced its guidelines for telecom sector restructuring and the 3G licenses issuance to follow. Find out more on +8* and during the panel tonight!. [...]
[...] The great Chinese 3G story is at an end. After years of speculation, MII — that’s the Ministry of the Information Industry if you’ve not been keeping up — has spoken. China’s essentially going to end up with three huge converged telcos, in a sort of ‘Son of RBOC’ arrangement mimicing the USA: as China Unicom merges with China Netcom, China Mobile buys China Tietong, China Telecom buys Unicom’s mobile assets, and China Satellite becomes a China Mobile division. (Yes, there will be a test afterwards to check you’ve remembered it all.) [...]