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China Telecommunications Corp., which controls more than 95 percent of the country's fixed-line telephones, formally split into two separate entities yesterday.
The telecom giant was divided into northern and southern companies, with the southern entity retaining the China Telecom's name.
The spilt, which happened on the eve of World Telecommunications Day today, paves the way for greater competition and sale of shares by the new operators - China Telecom Corp. and China Netcom Group Corp.
The 10 northern provinces were handed over to rival China Netcom Corp. yesterday. The new enterprise, the China Netcom Group Corp., was also merged with Jitong Network Communications Corp.
A revamped China Telecom, with operations in 21 provinces in the south and west, will sell shares in Hong Kong later this year. Analysts estimate the shares to sell for about US$8 billion.
China Telecom also said that it was looking to change its image with a new company logo.
China Telecom yesterday changed its logo, which now intercuts two "Cs" - an abbreviation of China Telecom Corp.
The two new companies will be allowed to sell services in each other's territories as part of government efforts to spur competition and investment.
Following the split, China Telecom's market share declined from 50.5 percent to 32.6 percent. China Netcom now holds about 18.5 percent of the market share after it won about 17.9 percent market share from China Telecom and Jitong.
China Telecom is now the No. 2 telecom operator in the country, giving up its top position to China Mobile Communications Corp., which operates mobile phone service.
China Mobile now holds 36.6 percent of the market.
China Telecom has assets worth 400 billion yuan (US$48 billion), while China Netcom will own 210 billion yuan in assets, Minister of Information Industry Wu Jichuan said last month.
Xi Guohua, an industry vice minister, will be China Netcom's general manager, and Zhou Deqiang will remain general manager of China Telecom, Xinhua Financial News reported.
China Netcom Corp., which specializes in providing data services to businesses, is expected to operate as a subsidiary to the new China Netcom Group. Chief Executive Edward Tian, who founded the company in 1999, is expected to stay in charge.
Analysts said that it will take months to integrate the former northern assets of China Telecom with those of China Netcom and Jitong.
The China Telecom hired Bear Stearns Cos. as its adviser for its proposed float in Hong Kong, while Morgan Stanley Dean Witter & Co., Merrill Lynch & Co. and China Inter-national Capital Corp. will help in the sale, Bloomberg News reported.
(eastday.com May 17, 2002)
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