Scheme Devised to Break Up MonopolyChina Telecom, one of the country's largest conglomerates, will be split into a north sector and a south sector in an effort to break up the monopoly in the fixed-line sector and encourage competition,according to today's Chinadaily.As part of the break-up, the north sector will merge with China Netcom, sources with the Ministry of Information Industry (MII) told China Daily Monday. The north sector will inherit China Telecom's business in 10 provinces and municipalities, including Beijing, Tianjin, Hebei and Shandong. The south sector will continue using the name China Telecom and will include 21 provinces and municipalities in the southern and northwestern regions, sources said. An MII spokesman refused to comment. The break-up had been under consideration for half a year. It was finally agreed to by the State Council in a recent conference. Detailed plans on assets, staff and management teams were so far not disclosed. China Netcom managers refused to comment on the coming merger. The plan came as a surprise to some business insiders. Zhang Xinzhu, a telecom researcher with the China Academy of Social Sciences, said the chosen plan is not the best one among the three proposals for China Telecom's reform. The other two proposals for China Telecom's reform are dividing the company into three businesses fixed-line, long distance and data or leaving China Telecom untouched. China Telecom is applying for the country's third mobile telecom licence, and the government may give it to the south telecom as compensation, Zhang said. But Yang Peifang, a researcher with the China Academy of Telecommunications, said the chosen plan is mutually beneficial. "The two new companies will monopolize the local phone business and become competitors in long-distance calls and data transmission,'' Yang said. The going public plan of China Telecom, which ceased after the government decided to split it up, will be picked up soon, and the north and south sectors could both be listed in the stock market, he said. China Telecom, the country's dominant fixed-line telecom carrier, controls more than 99 per cent of the market, with about 169 million users by August, MII statistics showed. With a revenue of 171 billion yuan (US$20.7 billion), China Telecom contributes about 40 per cent of the total income of the country's telecom industry. China Netcom's 3,000-member staff is tiny compared with China Telecom's 500,000 employees. It focuses on business of data transmission and Internet telephones. |
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