Friday, January 28, 2005

China Unicom is not possibly splitted

The Chinese regulator has brushed away the rumor that China Unicom, the second largest telecom operator, will be splitted in the industry restructuring in an urgent meeting today.

But it has brought more rumor that there will be a merging between China Unicom and China Netcom later.

National-owned Xinhua has reported that(in Chinese) the State-owned Assets Supervision and Administration Commission (SASAC) that China Unicom will not be splitted in the restructuring of telecom industry. The commission also blamed the media who reported the rumor, saying that they were short of evidence and responsibility. (Coincidentally, Xinhua itself has reported the rumor (in English) today on its English site)

But at least, one thing is confirmed officially that the industry will be restructured before the license granted to the operators. Definitely, not all of the current six operators, China Telecom, China Mobile, China Unicom, China Netcom, and the other two small ones(China Railway telecom, China Satellite telecom) will get the licenses.

In Hong Kong, China Unicom (0762)'s share price has experienced soft down by 0.80 per cent today, while China Netcom's price continue to riseby 1.38 per cent till the afternoon. Investors highlight Netcom, the smallest one of the four, speculating that it will benefit either getting the CDMA network from China Unicom cooperating with Unicom.

Who will decide the restructuring of the telecom industry and the release of 3G licenses? A friend asked me today. In fact, Both will be dicided by different entities though there are relations between the two. SASAC will mainly be in charge of the restructuring, while Ministry of Information Industry(MII) will grant 3G licenses. It could be applied in the Game Theory. where different authorties are gaming with each other in the telecom industry. It is reasonable for some reports to quote that some high-level official in MII supported the splitting of China Unicom. But they are not the right people to make the decision. SASAC, of course, expected to control the telecom operators as more as they could, but MII will use the remaining power to struggle for more. Now, the theory is being practiced.

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