China Telecom eyes Unicom CDMA network

It is widely rumoured in the Chinese telecoms industry that China Telecom, the country's largest fixed-line operator, is in talks to buy China Unicom's CDMA network. Earlier this month China Telecom Corp. Ltd. shares rose in Hong Kong trading as reports of the talks circulated in the Hong Kong press. According to the Ming Pao newspaper the deal has been all but agreed between the two parties but awaits a decision from the Chinese authorities. Consequently no announcement is thought to be imminent. Similar reports appeared in the Hong Kong Economic Journal. However, this is not the first time that rumours of a major telecoms reshuffle have emerged (see e.g. Analysis, China Media Intelligence, Volume 4, Issue 14 (29/11/06)) as the country waits for news on third generation mobile phone operating licence allocations. So far, most of these rumours - which included major mergers between operators and networks - have yet to be realised.

China Unicom, the smaller of China's two mobile telecoms companies, is the only Chinese mobile operator to run both GSM (global system for mobile communications) and CDMA (code division multiple access) networks. However, it is expected that both fixed-line operators, China Netcom and China Telecom, will be awarded 3G licences. A redistribution of existing mobile network resources in one form or another has been seen as a possible way of reducing the inevitably heavy overall industry expenditure on 3G deployment.

CMI - 22/8/06