Cracking China's Cellular Carriers

China Unicom is to be Cracked

As I reported about the inevitability of it in my September 15, 2007, post "China Shakes Up Telecoms Market: Mobile is the Driver", the Chinese government has signed off on the restructuring of China's telecoms market. South  China Morning Post reports that China Mobile will merge with fixed-line company China Tietong, which is currently a subsidiary of the national railway.(That's partially how T Mobile Germany started folks, its technology was seated in the German Railway system.)

China Unicom will be split into two companies. The GSM business is to be merged with landline operator China Netcom while rival landline operator, China Telecom will get the CDMA piece as a starter kit to enter the mobile market.

Chang Xiaobing, Unicom's chairman, is expected to lead the merged China Unicom GSM and China Netcom company. China Mobile chairman Wang Jianzhou, who is expected to retire shortly, will be replaced by Xi Guohua, who is currently a vice-minister of the Ministry of Information Industry. No word on which executive in China Telecom, often overlooked in media reporting, will be taking the helm.

"There will be three full-service telecoms operators and the new merged entities will be able to provide fixed-line and mobile communications services," a source said, adding that the reshuffle will occur after the Beijing Olympics.

No details were added about plans for the 3G licenses--although the buzz over the last year has anticipated restructuring would be linked to the allocation of the licenses. The widely expected result is that Unicom's GSM and CDMA operations would go down the WCDMA and CDMA routes respectively while China Mobile would be required to support the home grown TD-SCDMA technology. Given that China Mobile is a board member of the GSM Association, I wonder how that will play with the international standardistas?

Avoid being "Me, too!"
The challenge for both China Telecom and China Netcom will be to compete against the established rival China Mobile without being viewed by consumers as just a "me too" wirless service. Both converged companies have a service portfolio of the old guard: wireline, DSL and cable services. The only new media component of their poftfolio, especially China Telecom, is is IPTV.

Notwithstanding the restructuring, how nimble can these re-formed operators be against China Mobile?

OK. Now its your turn. What do you think of the China's government market intervention? Will this impact the share value of CMCC? Will this help or hurt mobile users in China, including offering more innovative services, or even providing the iPhone a new distribution channel beyond CMCC?Comments are very welcome (please!) with the objective of building a community who engages in a conversation. And if you liked the post, please dig, delicous, or stumble to spread the word! Thanks for your readership.

Thanks to Cellular News for the artwork

Comments

[Sagem Fan]

I think the share value would naturally increase