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Cold water poured on merger report
By Chen Zhiming (China Daily)
Updated: 2004-05-27 08:48

Sources close to the Ministry of the Information Industry yesterday dismissed reports that the nation's telecoms regulator has any plans to merge the nation's four phone operators into two firms.

Hong Kong's Ming Pao Daily had claimed on Monday that the ministry would take the step in order to increase the competitiveness of the sector before overseas firms are able to enter it in 2006.

"I have heard nothing about such a plan," an anonymous ministry official told China Daily yesterday.

But ministry spokesman Wang Lijian declined to comment, merely saying: "I just read the news in the Hong Kong media."

According to the newspaper, the country's two mobile phone companies would each be combined with one of the two fixed-line operators.

China Mobile Communications Corp (China Mobile) would be merged with China Network Communications Group Corp (China Netcom), while China United Telecommunications Group (China Unicom) would be combined with China Telecommunications Corp (China Telecom).

It also said the proposal, which it claimed had been submitted to the State Council for approval by the end of the year, will delay the listing plan of China Netcom and also China's issuing of high-speed phone licences.

The paper failed to state how it had obtained this information.

But Zeng Jianqiu, a professor at Beijing University of Post and Telecommunications, said that "the report might be a hint of further adjustment within the industry."

"Mergers and acquisitions are possible and necessary for the domestic telecom industry to become stronger," Zeng added.

However, he said that if there were some merger plans, it would be much more complicated than just joining two companies.

"Further adjustment is a trend for the industry. But finding the best way to adjust and integrate will be a tough task," Zeng said.

He believed that the splitting up of China's telecoms industry in the past few years was done in a hurry and the industry's adjustment process has yet to be completed.

"There are still some structural problems within the telecom sector and they should be addressed to avoid construction redundancy and price wars among telecoms operators," he said.

As one of the world's largest telecoms market, China's telecoms sector maintained a high momentum.

Ministry figures indicated that the number of its mobile phone subscribers reached 296 million by the end of last month. While its fixed-line subscriptions in China rose 285.4 million last month.

Mobile services in China are now provided by China Mobile and China Unicom, while fixed-line service are mainly provided by China Telecom and China Netcom.

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