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)
