Telecom operators dial up cooperation

China Mobile's 4G experience center in Hangzhou, Zhejiang province.?[Photo/China Daily]

Three telecom operators are researching the possibility of setting up a telecom infrastructure company that would be responsible for construction of base stations for mobile networks.

The Ministry of Industry and Information Technology said on Wednesday night that the three telecom carriers - China Mobile, China Unicom and China Telecom - are in discussions to build a collective company.

The ministry's announcement came in response to a report from Caijing.com that the carriers are going to lease network resources from a new company.

While the ministry said the new company would lead and coordinate construction of telecommunications infrastructure, it did not reveal whether the company would shoulder the responsibility of running and maintaining the network.

China allows more private capital in telecoms

China to allow full foreign ownership in telecom services in Shanghai FTZ

"Establishing the company is good for saving energy and environmental protection. Also, it will lower the construction cost of the telecom industry. Thus it ultimately benefits telecom service users," the ministry said.

China Mobile issued a statement on Wednesday night admitting involvement in the new company's founding. "Related works are underway," it said.

China Unicom replied that all parties are still discussing the issue and have yet to reach an agreement.

China Telecom, the smallest mobile network operator, said the purpose of launching a new infrastructure company is to promote resource sharing, as well as lower construction and operating costs.

China is going to embrace a new wave of base station construction because of the commercial rollout of the 4G network.

Large construction projects are very likely to encounter severe problems of overlapping investment, misuse of land resources and unwanted energy consumption. China Mobile has vowed to build or update 500,000 base stations for its 4G network by the end of the year, while the other two carriers are very likely to catch up.

"The average cost of one base station is about 1 million yuan ($159,000) and it takes even larger amounts of money for maintenance," said Xu Yong, a Beijing-based industry insider.

If three telecom operators collectively shut 100,000 base stations, they will save more than 20 billion yuan, he added.

Meanwhile, it is getting harder for operators to find new sites for building 4G base stations.

"A new joint venture will help get the work done and step up the pace of China's 4G network development," he said.