China will set up four integrated telecom operators that provide fixed-line, mobile, data and other basic telecom services in a move to make the telecom market more competitive, Minister of Information Industry Wu Jichuan said Monday.
Wu said the restructuring will take at least two years since most operators have separate licenses for either fixed-line or mobile service.
Thanks to reform efforts that started in 1998, the telecom market is now becoming competitive in China. It has two mobile operators, three fixed-line operators and one satellite operator, Wu said.
The telecom reforms split monopolized multifunction telecom operators into single service providers, a necessary step to make the industry more competitive.
The government will let them become competitive in individual businesses first and then allow them to gradually form integrated service providers.
"With four integrated service providers, the market will become fully competitive, and customers will be able to enjoy high quality services at reasonable prices," the minister said.
The government has considered encouraging telecom operators to go public in the domestic stock market instead of the overseas bourse, Wu said.
Wu also said that the two new fixed-line carriers, China Network Communications Corp and China Telecom Group, will be officially launched on February 12, the start of the Spring Festival.
Wu started working in the telecom industry in 1959 and has been in the spotlight during the reform process. The performance has yielded mixed results.
The industry, which is developing far ahead of overall economic growth, has become the world's leader in both equipment manufacturing and telecom customers.
Last year, China surpassed the United States in the number of mobile phone users and is gaining in the number of fixed-line telephone users.
China has registered 90 million new telephone users, 60 million of whom chose mobile phones, Wu said.
"The record is hard to break," he said.
He predicted that 70 million people will become new telephone users, with 50 million of them turning to mobile phones.
With more telecom companies expanding and itching to go public, the government has considered the domestic market as a good choice along with the overseas bourses, Wu said.
China Mobile and China Unicom, the country's dual mobile carriers, have both listed in the overseas markets and attracted more than US$20 billion.
The management level of the two has been significantly upgraded according to requirements of the international markets. Yet the interests of overseas stock investors and domestic customers are sometimes hard-pressed to compromise, Wu said.
When the operators cut prices to attract more customers, investors think that their profits will fall so they sell the stocks. But that just pushes down the stock price.
But keeping it at a high price would make investors happy and hurt customers.
If the stock investor and telecom customer are one person, he will balance the situation by himself, the minister said.
"Telecom operators might not have to go to the overseas stock markets," Wu said. "With the maturity of the domestic bourse, the home market might also be a good choice."
Besides, domestic stock investors will have opportunities to buy high growth telecom shares -- something they never got the chance to acquire, the minister said.
(China Daily January 8, 2002)
