China Tele­com, Uni­com ink strate­gic agree­ment

China Daily (Canada) - - LIFE - By MASI masi@chi­nadaily.com.cn

China United Net­work Com­mu­ni­ca­tions Group Co Ltd andChina Telecom­mu­ni­ca­tions Corp inked a strate­gic re­source-shar­ing deal on Wed­nes­day, dis­pelling ru­mors of a pos­si­ble merger be­tween the two firms.

The deal is the lat­est joint ef­forts by the coun­try’s sec­on­dand third-largest car­ri­ers to take on in­dus­try leader China Mo­bile Com­mu­ni­ca­tions Corp.

Un­der the pact, Chi­naUni­com and China Tele­com will share re­sources to jointly build net­works, ex­plore in­no­va­tive In­ter­net busi­nesses, as well as ne­go­ti­ate in­ter­na­tional roam­ing rates.

Yang Jie, gen­eral man­ager of China Tele­com, said: “The agree­ment has noth­ing to do with in­dus­try re­struc­tur­ing or any merger of China Tele­com and China Uni­com.”

Yang said the deal will also in­volve cap­i­tal co­op­er­a­tion, but did not of­fer any fur­ther de­tails.

Last month, China Tele­com chair­man Chang Xiaob­ing re­signed af­ter he was de­tained and put un­der in­ves­ti­ga­tion for sus­pected cor­rup­tion.

Lu Yimin, gen­eral man­ager of China Uni­com, said the two com­pa­nies are highly com­ple­men­tary in terms of re­sources. “Our top pri­or­ity is to im­ple­ment the part­ner­ship at the pro­vin­cial and county lev­els.”

China Uni­com’s shares rose 3.84 per­cent to HK$8.66 ($1.11) on Wed­nes­day af­ter jump­ing as much as 5.5 per­cent on theHong Kong Stock Ex­change. China Tele­com’s shares also climbed 4.82 per­cent to HK$3.48.

The agree­ment came as the two com­pa­nies are trail­ing China Mo­bile in both 4G base sta­tions and 4G users.

Ex­perts said rather than a merger, a com­pre­hen­sive part­ner­ship is a bet­ter op­tion for China Tele­com and China Uni­com.

“If a merger takes place, it will take at least two to three years for the two tele­com gi­ants to fully in­te­grate their tal­ents and re­sources, given their huge size,” said Xiang Li­gang, founder of the tele­com in­dus­try web­site cc­time.com.

“It will, in fact, be­come a bur­den and dis­tract their time and en­ergy away from catch­ing up with China Mo­bile,” he said.

As of Novem­ber, China Mo­bile has built more than 1 mil­lion 4G base sta­tions and its 4G sub­scribers amounted to 287 mil­lion, more than China Tele­com and China Uni­com com­bined.

Fu Liang, a free­lance in­dus­try ex­pert, said the agree­ment cov­ers a wide range of ar­eas and high­lights the se­nior ex­ec­u­tives’ de­sire to co­op­er­ate with each other.

“The team-up will chal­lenge China Mo­bile’s dom­i­nance to some ex­tent. But how big a pie they can take away from Chi­naMo­bile will hinge upon on how well the two com­pa­nies im­ple­ment the part­ner­ship at grass­roots level,” he said.

Lead­ers of the two com­pa­nies’ cloud com­put­ing units were also present at the sign­ing cer­e­mony. “It in­di­cates that China Tele­com and China Uni­com may also join hands in ar­eas such as cloud com­put­ing and In­ter­net data cen­ters,” Fu said.

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