China
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.
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 yesterday.
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.
A
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.
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
license, and the government may give it to the south sector 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
Daily 10/16/2001)