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Telecom industry reorganization

(China Daily)
Updated: 2008-07-07 17:12

Hurdles

The overhaul folds China's carriers into three giant full-service companies and will grant each a license to operate third-generation mobile services.

China guards its telecom sector zealously, banning foreign firms from owning any operator. Most industry experts don't expect Beijing to change its policy anytime soon.

Seven years after Beijing joined the World Trade Organization, foreign strategic investors have been confined to small stakes in the largest operators: Vodafone's 3.3 percent of China Mobile and SK Telecom's 6.6 percent of Unicom.

AT&T has a venture with Shanghai Telecom, but it can only operate intra-office networks for firms based in Shanghai.

Chinese carriers, for their part, are keen to secure foreign partnerships. But their focus for now is to ensure the industry revamp goes smoothly, before looking further afield.

The spotlight has fallen on China Telecom, which will pay more than $15 billion for wireless peer Unicom's CDMA (code division multiple access) network, which only broke even in 2006 after years of losses and is just a third the size of Unicom's GSM-standard network.

Up to five companies, including one from the United States, have approached China Telecom, a source within the Chinese company's management told Reuters. But absorbing and integrating Unicom's CDMA network is Telecom's first priority for now, the source added.

"The soonest that we can begin to talk to foreign firms is probably the fourth quarter. We haven't even begun hiring financial advisers," said the source, who declined to be named because of the issue's sensitivity.

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