China Unicom

Unicom stock surges on news of break-up

PUBLISHED : Tuesday, 12 June, 2007, 12:00am
UPDATED : Tuesday, 12 June, 2007, 12:00am

Shares of China Unicom, the smaller of the mainland's two mobile-telephone operators, surged as much as 7.96 per cent yesterday on news Beijing had decided to sell its networks to fixed-line carriers.

Unicom closed 5.79 per cent higher at HK$11.70 after peaking at HK$11.94, boosting other mainland telecommunications stocks. China Netcom Group Corp (Hong Kong) rose 2.76 per cent to HK$20.45, China Telecom Corp climbed 2.25 per cent to HK$4.55, and China Mobile gained 0.76 per cent to HK$72.90.

The stocks advanced despite Unicom announcing it was not in talks on any acquisitions that needed to be disclosed. Last week, a mainland newspaper reported that the State-owned Assets Supervision and Administration Commission (Sasac) had agreed to restructure the telecommunications industry and split up Unicom.

The report said Unicom would sell the CDMA network to China Telecom and merge its more profitable GSM mobile business with Netcom.

China Mobile would take over two smaller operators, China Railway Communications and China Satellite Communications Corp, it said.

Industry watchers said it would take months before any industry restructuring was launched, as the government needed to consider market competition in a new operating environment.

'Sasac will not oppose [any move] to consolidate six telecoms players into three. However, the final decision is not made by Sasac,' said TD-SCDMA Forum, a government-backed industry group.

UBS yesterday said the industry restructuring was unlikely to happen before October, when the trial run of the homegrown TD-SCDMA mobile network was completed. The restructuring could be delayed until 2009.