Tuesday, September 02, 2008

China - regulation

Regulator should take more steps to promote competition: China Telecom

China Telecom, the country's biggest fixed-line operator, expects the government to take measures to further promote competition in the telecommunication sector amid increasing mobile users and dropping fixed-line subscribers.

"We would like to see regulations on resource sharing (among telecommunications operators)," among other regulations that would come in stages, Wang Xiaochu, chairman and chief executive, was quoted as saying in a Friday report by the Financial Times.

According to the National Audit Office (NAO), more than 1.12 trillion yuan ($164 billion) was spent on the construction of basic facilities between 2002 and 2006. However, only one-third of the telecom cables are used. More money is required to maintain all the cables, causing huge waste.

China Telecom, which has acquired the CDMA business of China Unicom as part of an industry-wide restructuring, hopes to see the sharing of resources, such as networks and transmission towers, so as to "improve efficiency and fairer price competition", Wang said.

Last week, ChinaTelecom reported a net profit fall of 8.2 percent to 12.63 billion yuan in the first half of 2008 year-on-year because of a significant decline in its core fixed-line businesses.

Meanwhile, China Mobile, the country's leading wireless operator, beat analysts' expectations to register a 44.7 percent rise year-on-year to 54.8 billion yuan in its first-half net profit, as its subscriber base, value-added business and voice usage volume continued to grow rapidly.

China Mobile controls more than 70 percent of China's wireless market and is signing up 7 million users a month, according to the newspaper report.

Concerned about the "serious imbalance", regulators announced in May a move to restructure the industry into three operators as part of the country's effort to generate more competition.

China Mobile, the first to reveal the broader plan for the whole industry, released on May 23 plans for its acquisition of fixed-line operator, China Tietong.

China Unicom, the smaller wireless service provider, announced on June 2 its plan to acquire fixed-line operator China Netcom Group Corp with a share swap deal.

The most likely policy changes in the near future include introducing number portability, analysts say.

Currently, mobile users are not allowed to take their existing phone numbers with them when switching to another operator, thus making it hard for rivals to attract customers away from China Mobile.

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