China restructures its telecommunications infrastructure into three giant companies

China unveiled its plan for restructuring the telecommunications sector, ending a long entrenched separation of mobile and fixed line services.

The information ministry asked the nation's six telecommunication companies to merge their assets and form three groups, part of an industry overhaul to boost competitiveness in the world's largest telephone market.

In a statement on the government website, China said the plan is aimed at creating three competitors of roughly comparable strength, while cutting telecommunications costs, avoiding duplicate network construction and boosting phone penetration nationwide. The three entities thus created will be China Mobile, China Telecom and  China Netcom.

China Mobile Communications Corp. will take control of fixed-line operator China Tietong

Telecommunications Corp., according to a statement on the Ministry of Information's Web site. China Telecom Corp., the nation's biggest fixed-line operator, will gain mobile-phone assets by taking over the CDMA (code division multiple access) mobile network operations of China Unicom, the smaller of the nation's two key mobile phone operators. It will also take over the satellite and other operations of smaller player China Satcom.

China Unicom, which also has GSM (global system for mobile communications) mobile network operations will be encouraged to merge with fixed line operator China Netcom.

The overhaul will boost earnings for fixed-line companies China Telecom and China Netcom Group Corp., which have lost users to the faster-growing mobile market. The reorganization will also increase competition for China Mobile, whose subscribers make up about two-thirds of the country's total.

Additionally, the government disclosed plans to issue three licenses for third- generation high-speed mobile services to the companies after the restructuring, according to today's statement, issued jointly by the Information Ministry, the National Development and Reform Commission and the Ministry of Finance.

''The three 3G licenses would be issued to help create three competitive phone companies that have telecom resources nationwide, near equal strength and scale, and can offer both mobile and fixed-line services,'' the statement said.

China Mobile Communications Corporation, also known as China Mobile or CMCC, is the largest mobile phone operator in China. It is the world's largest mobile phone operator ranked by number of subscribers, with over 380 million customers (as of end of February, 2008). By turnover it is second to Vodafone, which owns 3.3 per cent of China Mobile. China Mobile is also fifth in global brand equity according to BrandZ rankings.

China Mobile is head-quartered in Hong Kong and has the largest market cap amongst all companies listed in the stock exchange there, surpassing HSBC, one of the largest banks in the world. It employs more than 119,000 people and reported annual revenue of $33.6 billion in 2007.

China Telecom Corp. Ltd. is the largest fixed service telecommunications provider in the People's Republic of China. It provides internet services, and portions of the Xiaolingtong wireless system. It provides approximately 62 per cent (46 GB/s) of China's internet bandwidth.

China Netcom, full name China Netcom Group Corporation (Hong Kong) Limited, abbreviated CNC, was originally formed in August 1999 by the People's Republic of China government to enable inward investments to build high speed Internet communications in the country. It is a subsidiary of China Network Communications Group Corporation. Employing over 92,000 people, the company reported annual revenue of $7.8 billion last year.