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China Telecom

Beijing keeping phone executives on the move

PUBLISHED : Thursday, 14 July, 2011, 12:00am
UPDATED : Thursday, 14 July, 2011, 12:00am

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On the cusp of a much-speculated expansion, China Telecom's president has left to join the Ministry of Industry and Information Technology (MIIT).

In a filing with the Hong Kong stock exchange, the mainland's fixed-line network giant said Shang Bing, who also served as its chief operating officer, resigned effective yesterday in light of his appointment as the new MIIT deputy minister.

Chairman and chief executive Wang Xiaochu said Shang 'has no disagreement with the board and did not have any matters in relation to his resignation that should be brought to the attention of the shareholders of the company'.

China Telecom did not announce a succession plan after Shang's resignation, although a spokesman said the board would look into the matter.

It is the latest change in what appears to be a new round of government-directed reshuffling of senior executives in the mainland's telecommunications sector.

'This was expected after the deputy minister at MIIT, Xi Guohua, moved to become vice-chairman at China Mobile's parent firm,' Lisa Soh, an analyst at Macquarie Securities in Hong Kong, said.

China Mobile, the world's largest wireless network operator, last month announced Xi had become secretary of the Communist Party committee and vice-chairman at China Mobile Communications, the controlling shareholder of the Hong Kong-listed firm.

Xi replaced Wang Jianzhou as secretary of the company's party committee. Wang remains the chairman of China Mobile.

Soh said 'the bigger issue' to be considered by the market was 'whether there will be any more management changes in store for the [three mainland] operators'.

The reshuffle, however, pales in comparison to the 2008 industry restructuring. This effort, which involved the merger of different telecommunications assets, created a market where three nationwide carriers operated and developed both fixed-line and wireless networks.

For many years, fixed-line market leader China Telecom had to sit and watch China Mobile and China Unicom enjoy extraordinary growth in the mobile phone market. That changed with the state restructuring.

China Telecom, the No 3 wireless carrier on the mainland, is expected to further close the gap with its two larger domestic mobile rivals when it becomes Apple's second mainland carrier-partner for the popular iPhone, after China Unicom.

That deal is expected to become official in November when China Telecom will carry the iPhone, according to a Reuters report yesterday that cited two different sources familiar with the situation.

Despite news of its president's resignation, China Telecom saw its share price rise 5.12 per cent to close at HK$4.93 yesterday.

'It would seem that the iPhone speculation attracted more interest [in the market],' Soh said.