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China Telecom to Reform Ahead of IPO - Regulator
China's telecoms regulator said Monday China Telecom will undergo major changes ahead of the dominant fixed-line carrier's planned US$5-7 billion overseas listing.
China Telecom had not decided how or when it would change, although it would "want to do so quickly," a Ministry of Information Industry (MII) spokeswoman said.
"Right now, they're taking ideas from all sides on how to reform," the spokeswoman said.
China Telecom, which plans a global share offering and a dual listing in Hong Kong and the United States, would undergo reform to become more competitive in China's slowly liberalising telecoms market, she said.
China Telecom officials were not immediately reachable for comment.
Another MII spokesman said the reform would be part of a government bid to bring competition to China's telecommunications market.
"It would be a process in which many parties take part," the spokesman said, referring to government regulators.
Break up uncertain Telecoms experts speculated that the government, which spun off China Telecom's mobile phone unit in 1999, would break up China Telecom into various business units or regions.
One plan would split the state giant into three firms offering local, long distance and data transmission, it said.
Another possible split would be geographical, with one company in northern China and one in the south.
Or the government could hand over China Telecom's networks to a new company that would lease network capacity to licensed telecoms operators, including China Telecom, the newspaper said.
China Telecom, a virtual monopoly which has been criticised by customers for low service standards, might be forced to improve its service quality if it faced more competition, the MII spokesman said on Monday.
"If competition is introduced, it might provide better service," he said.
While smaller rival China Unicom Group offers local fixed-line telephone service in limited parts of China -- and new entrant China Railway Communications Corp also has a fixed-line licence -- China Telecom holds a monopoly-like grip on China, he said.
Revenues need boost Analyst Zou Jun of Beijing-based consulting firm BDA China Ltd said China Telecom needed to improve its profitability and competitiveness to sell foreign investors on a global share offer.
Zou said China Telecom's per-user revenues were "significantly less" than those of foreign carriers.
"The most important thing for China Telecom is how to improve their services and how to improve their numbers," he said.
China Telecom's listing has been slated for this year, but it still awaits government approval, and some analysts expect it will slide into next year.
The government has been trying to bring competition to its telecoms market since 1994, when it created China Unicom Group, the parent of the Hong Kong-listed China Unicom Ltd.
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