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China's largest mobile operator, China Mobile, is taking over fixed-line carrier, China Railway Communication (Tietong). The move marks the start of what is expected to be a major sector restructuring. Jing Li, from Global Insight said, "the long-awaited restructuring of the Chinese telecoms market appears closer than ever before." The government is believed to be working on a number of mergers between mobile operators and fixed-line operators in order to increase competition. A plan could be released this weekend, Li said.
"A successful restructuring will undoubtedly spur competition in the market as the resultant telecoms players square up to each other," Li said.
Any sector restructuring is expected to affect China's largest fixed-line operator, China Telecom and its smaller rival, China Netcom, as well as mobile operator China Unicom.
China is the world’s largest mobile telephony market, with 560 million GSM and CDMA users, and the government expects that number to reach 600 million soon. Mobile operators say new accounts are growing at double-digit rates, while fixed-line operators are seeing subscriber numbers that are flat or declining.
China Telecom and China Netcom have tried to increase revenues by promoting broadband, Web-based cable TV and other services, but earnings still are growing more slowly than at mobile carriers.
The government is preparing to license third-generation mobile service that will support video, Web access and other services. The new services are expected to increase mobile operators’ revenues further as new services are offered. Source: Associated Press - WDR/Intelecon Regulatory News.
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