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China Netcom denies merger talks

(China Daily HK)
Updated: 2006-12-06 09:52

Talk of industry restructuring has persisted for years and run the gamut from rumours that Netcom would combine forces with Unicom, to speculation that Unicom would be split and hived off to fixed-line rivals sporadic hints of which have moved the carriers' stocks in the past year.

But on Monday, the mainland's top telecom official told industry executives that he was not aware of a major restructuring of the mainland's telecommunications industry the world's largest after the United States.

No PCCW moves

Netcom shares were up more than 4 per cent in early afternoon trade, outperforming a 1.2 per cent gain in the index of Hong Kong-listed mainland firms. Unicom was up 3.2 per cent.

Separately, Netcom has no plans to touch its one-fifth stake in PCCW despite local media speculation it wished to take control of the Hong Kong firm.

"The parent company has no plans to increase that stake. We're comfortable being the second-largest shareholder.

What Netcom is now eyeing is a third-generation licence same as its larger fixed-line rival China Telecom.

Fixed-line operators are losing business as more people go wireless.

Netcom and bigger rival China Telecom are looking to non-voice services such as broadband Internet and Internet television to drive growth.

Analysts say the mainland may unveil the results of trials on a homegrown 3G standard known as TD-SCDMA due for completion in June but delayed until October in the coming months, with 3G licences possibly following in early 2007.

Industry players have been hoping for three years that the mainland would give the green light for high-speed 3G mobile networks, unleashing more than US$10 billion in spending on equipment and jumpstarting growth in the maturing mobile market.