By Li Weitao and Wang Xu (China Daily)
Updated: 2007-10-25 09:52

The government will continue to push reform of the telecom industry, the State assets body said yesterday.

Wang Ruixiang, deputy chief of the State-owned Assets Supervision and Administration Commission (SASAC), told a telecom forum in Beijing the reform would be deepened to "boost the sustainable development of (telecom) companies".

Large State-owned companies need to be merged or restructured to "increase efficiency", he said.

The SASAC is believed to be engineering a reshuffle of the telecom industry, although it has previously denied the move. One of the most rumored proposals is that the number of large operators could be reduced from four to three.

Under that arrangement, China Unicom, the country's No 2 cellular operator, would be divided into two, with one of its wireless networks sold to fixed-line carrier China Telecom and the other merged with China Netcom. China Mobile, the dominant mobile operator, would remain unchanged.

China Telecom chief Wang Xiaochu has publicly proposed buying one of Unicom's wireless networks.

Unicom's shares traded in Shanghai have more than tripled since last June, partly helped by speculation of a possible sale of one network.

Lou Qinjian, vice-minister of the information industry, said on the sidelines of the 17th National Congress of the Communist Party of China last week that the ministry supported a reshuffle of the domestic telecom industry.

It's the first time the Ministry of Information Industry (MII) has given its support to the restructure. The SASAC is believed to have a bigger say in the possible reshuffle.

A researcher with the SASAC said the ministry is still collecting proposals for the restructure and the final scheme is unlikely to be announced before next March when a new Cabinet will be formed.

Several ministries have been involved in the restructure including the SASAC, MII and the National Development and Reform Commission. Disagreements between regulators have complicated and delayed the process, analysts said.

However, the continuing slowdown of the fixed-line telephone business might eventually force regulators to speed up the restructure, the SASAC researcher said.

In the first nine months, China Mobile Ltd's profit surged by 30 percent.

Meanwhile, China Telecom Corp Ltd managed profit growth of just 1.8 percent during the period, as its fixed-line subscribers continue to switch to mobile phone services.

China Telecom lost 730,000 subscribers in September, compared with 380,000 in August.