China Unicom Ltd, the smaller of the nation's two mobile-phone
operators, rose to the highest in Hong Kong trading in almost a
month after a report said the country's top economic planning
agency supported a breakup of Unicom.
The shares gained 3.6 percent to HK$17.36, their best
performance since November 30, at the end of trading yesterday. The
National Development and Reform Commission said allowing China's
fixed-line carriers to acquire Unicom's mobile networks is the most
efficient plan for the industry, the Shanghai Securities
News said yesterday, citing a research report by the country's
top planning body.
China, the world's largest mobile-phone market by users, is
expected to reorganize the industry by breaking up Unicom into two
operators to be run by the fixed-line companies. China Mobile Ltd
controls two-thirds of the nation's wireless subscribers and is
adding customers at four times the pace of Unicom.
"The government is concerned China Mobile is much too dominant
and wants to even out the competition," said Francis Lun, general
manager at Fulbright Securities Ltd in Hong Kong. "By carving up
Unicom to China Netcom and China Telecom, the two new companies can
compete better with China Mobile."
Sophia Tso, a spokeswoman at China Unicom, declined to comment
on the report. China Unicom isn't aware of the reason for the
shares surge, the company said in a statement to the Hong Kong
stock exchange.
Fixed-line operators China Telecom Corp and China Netcom Group
Corp lost subscribers last month as the mobile companies offered
discounts to attract users. China Mobile gained 6.5 million
customers for a total of 362.8 million in November, while Unicom
added 1.4 million, taking its total to 158.9 million.
Unicom may sell its smaller network to China Telecom, the
nation's largest fixed-line operator, and merge its larger network
with China Netcom, Wang Jinjin, an analyst at UBS AG, said in a
report last week.
The Chinese government hasn't publicly said that it plans to
split up China Unicom, nor has it given a timetable for the
reorganization of the industry.
The NDRC opposed a breakup of China Mobile as a solution to
boost competition in the country's telecommunication industry as it
would be a case of "killing the rich to help the poor," the report
said, according to Shanghai Securities News.
(Shanghai Daily December 25, 2007)
