China - 3G and restructuring

3G licenses to follow hot on the heels of industry restructure- ministries

China will issue 3G licenses to China Mobile, China Unicom and China Telecom once the country's telecom industry completes its current restructure, government ministries confirmed on Saturday.

The Ministry of Industry Informatization (MII), National Development and Reform Commission (NDRC) and Ministry of Finance said in a joint statement that the issuance of 3G licenses was a major reason for the restructure, which will give China's telecom industry three network operators, each with nationwide network resources, relatively comparable strength and full service capabilities.

The statement confirmed that China Telecom will acquire China Unicom's CDMA network, including assets and subscribers, as well as China Satcom's basic telecom business, leaving China Satcom to specialize in satellite communications. China Unicom's GSM network will be brought under China Netcom, while China Mobile and China Tietong will merge.

The ministries said the rapid increase in mobile phone users in recent years, and the consequent decrease in fixed-phone users, has caused an imbalance in the market. The industry restructure will bring back a balanced environment for competition within the industry, they said.

China's six telecom operators generated total revenue of RMB 728 billion ($104.9 billion) in 2007, compared to RMB 371.9 billion ($53.59 billion) in 2001, while the national telecom user base has risen from 326 million households in 2001 to 913 million households in 2007.

On Sunday, China Telecom, China Unicom and China Netcom announced they were in discussions regarding the restructure.

China Telecom said that no agreement, including the price of their acquisition of China Unicom's CDMA network, has been reached yet. Wang Xiaochu is still chairman of the board and CEO of China Telecom, though Shang Bing, Miao Jianhua and Yang Xiaowei, former high-level officials from China Unicom, have already moved to China Telecom.

Wang Jianzhou remains president of China Mobile and the vice secretary of the company's Communist Party of China (CPC) Committee, according to China Mobile, while Zhang Chunjiang, the former China Netcom president, has become vice president and the secretary of the CPC Committee.

Former high-level China Netcom official Zhang Xiaotie, and former China Unicom official Li Zhengmao, have also joined China Mobile.

Chang Xiaobing, former CEO of China Unicom, is now leader of China Unicom's restructure preparation committee. All reassignments were effective May 23.

China Mobile, China Telecom, China Unicom and China Netcom maintained today their suspension of A-share and H-share trading, which commenced on Friday due to the restructure.