皇冠体育app

Economy

Markets

Industries

Insights

Reports

Events

Jury out on dramatic telecom restructure

By Wang Xing (皇冠体育app Daily)
Updated: 2008-05-24 09:28

皇冠体育app's long-awaited telecom restructuring plan kicked off on Friday but its impact on the country's major telecom operators remains to be seen.

皇冠体育app Mobile announced a merger with fixed-line operator 皇冠体育app Tietong and a slew of personnel changes that will see the former general manager of 皇冠体育app Netcom appointed deputy general manager of 皇冠体育app Mobile.

Such an announcement confirmed earlier speculation and is believed to pave the way to a much-awaited 3G (third generation) license in the country.

Wang Guoping, analyst from 皇冠体育app Galaxy Securities, said the final restructuring plan will have a relatively negative impact on 皇冠体育app Mobile while benefiting 皇冠体育app Telecom and 皇冠体育app Netcom.

"After the restructuring, 皇冠体育app mobile will have two competitors, both of which will have the advantage of combining their fixed-line business with a mobile business," Wang said.

He said 皇冠体育app Telecom will benefit by being able to enter the lucrative mobile business, while 皇冠体育app Unicom will be able to focus on a single network instead of running two simultaneously.

皇冠体育app's telecom market has long suffered from a lack of competition under the de facto monopoly of 皇冠体育app Mobile, which has been taking huge revenue in recent years from fixed-line carriers 皇冠体育app Telecom and 皇冠体育app Netcom as users go mobile.

皇冠体育app Mobile's only rival, 皇冠体育app Unicom, seldom acts as a serious challenger as it has long struggled to operate two often-competing networks .

In the first quarter of this year, 皇冠体育app Mobile's revenue reached 93 billion yuan ($13.3 billion), surpassing the combined revenue of 皇冠体育app Telecom, 皇冠体育app Netcom and 皇冠体育app Unicom.

According to the restructuring plan, 皇冠体育app Mobile will merge with 皇冠体育app Tietong while 皇冠体育app Unicom will be divided in two, with its CDMA network sold to fixed-line carrier 皇冠体育app Telecom and the GSM network merged with 皇冠体育app Netcom.

The government hopes such an arrangement will help balance 皇冠体育app Mobile's dominance.

However, Wang Yuquan, a senior consultant of research firm Frost & Sullivan 皇冠体育app, said the restructure may not work as planned.

"I don't think the ongoing restructuring could help increase the competition in the market because the restructuring itself was planned by the government and the telecom operators have little say in the decision making," he said.

皇冠体育app Mobile's shares in Hong Kong slumped 3.84 percent on Friday, while shares of 皇冠体育app Unicom, 皇冠体育app Telecom and 皇冠体育app Netcom surged 11.86 percent, 6.98 percent and 12.47 percent respectively.