China Unicom signed an inter-connection agreement on January 12 with China Telecom, kicking off its international and domestic long-distance phone services, China Daily reported.

China Unicom currently provides paging, mobile phone, Internet access, Intranet Protocol phone and limited locally fixed-phone services.

"It's a great deal, which will provide another option for Chinese customers to choose a long-distance phone service," said Wang Jianzhou, executive vice-president with China Unicom.

The company has finished the construction of two optical-cable backbones totaling more than 10,000 kilometers. And 23 long-distance phone switchboards and one international line switch board have also been installed.

China Unicom is now only authorized to conduct locally fixed-phone business in two cities and one province -- Tianjin, Chongqing and Sichuan. It will continue to expand its own fixed-line network, but will rely mainly on the phone network of China Telecom to provide long-distance service.

Wang said the inter-connection agreement will become effective after approval from the Ministry of Information Industry (MII).

The company enjoys the privileges granted by the government to have a 10 per cent margin of phone price discounts, compared with China Telecom. (China Daily)