Mainland closer to opening up sector
Beijing would soon reveal a pilot scheme as part of plans to open its telecoms sector to private investment, the Ministry of Industry and Information Technology said in Beijing yesterday.
The ministry last month unveiled a blueprint to allow more private funding into the industry, but details were sketchy. 'Opening these fields to private enterprise is the best way to encourage them to enter the industry,' Zhang Feng, head of telecoms development at the ministry, said.
Independent analyst Xiang Ligang said many private firms were already working in the sector. 'A lot of companies that engage in the value-added telecoms business are private, and hardware manufacturers like Huawei are private.'
But few of the private companies in the sector performed well because huge investment was often required, Xiang said.
Zhang said the ministry would further encourage greater use of private capital in such areas as access networks, the user-premise networks, and network custody. The government would also encourage private companies to build and operate infrastructure, take stakes in telecoms firms and go overseas.
Xiang said it was unrealistic for private firms to expect to compete with the mainland's big three carriers - China Telecom, China Mobile and China Unicom - but said they could be virtual network operators instead.
'They can contract networks for certain residential areas. This kind of service is well-developed overseas but rarely seen in China,' Xiang said, referring to a growing trend for companies to use existing telecoms infrastructure rather than trying to build it themselves. He said private companies could also find opportunities building networks for large companies and universities.
'Such projects can need up to 100 million yuan [HK$122.66 million] in [capital] investment,' Xiang said.
Zhang said private companies' flexibility and ability to react quickly to market changes gave them an edge over bigger players.
'Private enterprises have many advantages that state-owned enterprises lack,' he said.
China has the world's largest mobile phone population. The total number of mobile phone users on the mainland reached 1.05 billion by the end of June, and the number of third-generation users reached 175.8 million as of June 30 - up 47.3 million from December last year, according to the ministry.
The number of mobile phone users on the mainland at the end of June - the world's biggest cellphone population