China plans mega telecom merger to take lead in 5G race

China is exploring a merger between two of the nation’s three wireless carriers, according to people familiar with the matter, as the nation seeks to speed up the development of 5G and gain an advantage over the US in the race to dominate the mobile technology.

The country’s top leaders are reviewing a proposal to combine China United Network Communications Group and China Telecommunications but no decision’s been made and a merger may not happen, said the people, who asked not to be identified discussing a private matter. At stake is the ability to shape and control 5G, the high-speed wireless technology billed as the key to revolutionising how we use everything from home appliances to cars. Concerns that China could get the upper hand led to US President Donald Trump to block Broadcom’s bid to buy chipmaker Qualcomm, in what would have been the biggestever acquisition in the technology industry.

“5G success is one of the most important goals to China and the merger is the perfect solution to what China wants to achieve,” said Edison Lee, an analyst at Jefferies Hong Kong Ltd, who’s been flagging the possibility of a merger between the two companies since July and as recently as last month. “As we head into another step up in the US-China trade war, we believe the State Council would be more eager to think fresh and more radically about how to accelerate 5G rollout.”