China Telecom acquires Beijing operator
01 April 2008
China Telecom acquires Beijing operator
China's biggest fixed line carrier, China Telecom, said Monday it is to merge with state-owned subsidiary Beijing Telecom in an RMB5.6bn (Eur510m) deal.
The operator said it was seeking to capitalise on the increased demand for telecommunications services during the Beijing Olympic Games period, which takes place in August, as well as taking the opportunity to realise operating synergies.
During 2007, China Telecom managed to grow its net profit and revenues just 1 per cent and 2.8 per cent respectively, as increasing numbers of consumers migrated from fixed to mobile phones.
The acquisition is also significant ahead of a long anticipated shake up of the Chinese telecoms market as part of the award of 3G licenses in the country. One of the most likely scenarios would see second placed mobile operator, China Unicom, split up and sold to fixed-line giants China Telecom and China Netcom.
Unicom operates a GSM and CDMA network and has dedicated engineering teams for each. So a separation of operations could make it easier for Unicom to find strategic investors for each of the businesses.
Speculation is rife that a merged Unicom CDMA and Netcom network will roll out CDMA2000, while China Telecom will launch WCDMA or TD-SCDMA using Unicom's GSM network.
This week China moved a step closer to commercialising its home grown 3G technology, with the revelation that the country's leading mobile operator is to deploy TD-SCDMA from next month.
Starting April 1, China Mobile will issue around 20,000 TD-SCDMA handsets to selected users and will make a further 40,000 available to paying subscribers. China Mobile is also trialling next generation wireless technology LTE (Long Term Evolution), in a three way partnership with Vodafone and Verizon Wireless.
So it appears that the allocation of 3G licences in China, whenever that happens, will be the only thing to put an end to the rumours. The Beijing Olympics in August were long seen to be an attractive event to launch 3G services around, but with that time fast approaching, nothing is certain.
Ovum analyst, Charice Wang, notes that Beijing is a highly developed broadband market. "The Beijing IPTV market is potential huge and it is expected strong growth around Beijing Olympics. Therefore, the expected continuing good performance of Beijing Telecom possibly helps to improve China Telecom's performance indicators in 2008."
Nevertheless, Wang says, "It is difficult to see China Telecom performance could be much significant improved after its absorb Beijing Telecom. In short time, we can not see China Telecom will offer effective bundling service to compete with China Mobile and stop the trend of FMS as well."
To comment on any articles, please contact us at chatback@telecoms.com or have your say on our blog.
Bookmark this page
