China considers mega-merger to boost 5G - Mobile World Live

China considers mega-merger to boost 5G

04 SEP 2018

China is considering a merger between China Unicom and China Telecom, two of the country’s top three operators, in a bid to speed up 5G investment and better compete with the US, Bloomberg reported.

Sources told Bloomberg that top leaders in the country were reviewing a proposal to tie-up the two companies, but cautioned that no decision had been made and a merger may not happen.

Indeed, Unicom was reportedly not aware of a merger, while China Telecom, the state-owned Assets Supervision and Administration (which oversees state owned companies) and the Ministry of Industry and Information Technology did not comment on the speculation.

Both companies are state-run, with a combined value of more than $77 billion according to market value which rose following Bloomberg’s report.

China Unicom is the country’s second largest operator with 302 million subscribers as of H1 2018, ahead of third placed China Telecom (282 million), while both trail market leader China Mobile (906 million), according to GSMA Intelligence.

The proposal reportedly argues that a merger between the two, which would create a combined entity that would be second to China Mobile on a global basis, not just China, could help with the government’s ambitions for 5G.

Sources said a combined China Unicom and China Telecom could make the process of investing in 5G easier than doing it separately.

US tensions
Indeed, a merger between the two companies has been considered by the government for years, but it has not followed through.

Sources said that escalating tensions with US, which has seen the emergence of a trade war, has however raised the urgency of the matter.

China is making the development of 5G a matter of high importance, particularly after the US imposed an import ban on Chinese vendor ZTE which crippled the company and forced it to shut down operations, before agreeing a settlement with President Donald Trump.

Reducing the Chinese market to two players would also indicate that the Chinese government would rather put its global interests above local competition. Most markets in the world operate with three or four major carriers.

Chinese companies’ ambitions globally have also suffered setbacks in the past year. Huawei, for example, has been banned from supplying telecoms equipment to the US, while both Huawei and ZTE are also banned from bidding for 5G equipment contracts in Australia.



Kavit Majithia

Kavit joined Mobile World Live in May 2015 as Content Editor. He started his journalism career at the Press Association before joining Euromoney’s graduate scheme in April 2010. Read More >>

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