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China Mobile to acquire Tietong in major industry overhaul

By Wang Xing (China Daily)
Updated: 2008-05-24 09:42

China Mobile Communications Corp (CMCC) announced on Friday that it will acquire fixed-line operator China Tietong as its wholly-owned subsidiary, in a move that may herald a much-awaited overhaul of the country's telecom industry.

Tietong will remain an independent operation, CMCC, parent of Hong Kong-listed China Mobile Ltd, said in a statement.

CMCC also announced a slew of personnel changes.

Zhang Chunjiang, general manager of China Netcom Group Corp, will join CMCC as its vice-general manager and Party secretary.

Former head of Tietong and another China Netcom vice-president will also join CMCC as vice-general managers.

Industry insiders are expecting more swaps of executives among the country's top four State-owned operators: China Mobile, China Telecom, China Unicom and China Netcom.

An announcement of the overhaul and the management reshuffle had been expected on May 17 - World Telecommunication Day - but was delayed after a magnitude-8.0 quake hit Sichuan province on May 12, disrupting telecom services there.

The reshuffle is expected to pave the way for a much-anticipated industry consolidation, which could see China Unicom sell its CDMA networks to China Telecom and merge its GSM networks with China Netcom, industry experts said.

That arrangement will enable all the major carriers to provide both fixed-line and mobile phone services.

Regulators have viewed such an arrangement as a major way to step up competition, because a consolidation of China Telecom, China Unicom and China Netcom could create two larger telephone operators able to compete with behemoth China Mobile.

Currently, only China Mobile and China Unicom are allowed to operate the lucrative mobile phone business.

But China Unicom is too weak to challenge China Mobile, whose revenues last year were roughly the same as the combined amount of China Unicom, China Netcom and China Telecom.

China Telecom and China Netcom are facing a slowdown in their fixed-line business.

Wang Guoping, an analyst at China Galaxy Securities, estimated the overhaul will be completed in four to six months, given the difficulties in asset assessments, especially those of China Unicom's GSM and CDMA network.

Shares of China Telecom, China Unicom and China Netcom in Hong Kong and Shanghai were suspended on Friday.