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Eric Ng

China's telecoms regulator has tried to clear up the confusion over the controversial mobile-phone billing proposal in a bid to soothe investors' fears.

Wu Jichuan, the Minister of Information Industry, announced yesterday that the controversial one-way mobile billing system would not be implemented within the next one to two years.

'With regard to the mobile tariff structure, there won't be any settled plan within one or two years,' Mr Wu said.

The apparently contradictory messages from officials about telecoms policy over the last few days have unnerved investors.

It has raised concerns about the transparency of the decision-making process in some key sectors.

Share prices of China's two listed telecoms operators surged strongly yesterday, after plunging earlier in the wake of the confusion over policy.

At present both mobile callers and receivers pay for phone calls, but officials have suggested that only the callers should pay their share in the future. That would be good for consumers because bills would fall, but could be bad for the companies, who might face substantial falls in revenues.

Mr Wu said the new telecoms policy would be put in place only after public consultation, as any changes in tariffs would have a widespread impact, affecting more than 200 million telephone subscribers.

'According to current pricing law, if there are changes in various areas in which consumers would be affected, public hearings must be conducted before a change takes place in the tariff structure,' he said.

The message was conveyed to more than 100 fund managers and analysts at a tele-conference organised by Goldman Sachs and China Mobile.

It is rare for the mainland government to explain its policy plans to fund managers.

But brokers and fund managers said the move failed to rebuild investors' confidence in China related stocks, at least not in the short term.

'Once the confidence is ruined, you can't expect it will come back again quickly,' Vickers Ballas Hong Kong sales director Steven Leung Wai-yuan said.

Analysts said Mr Wu's appearance only helped to ease uncertainties over the implementation timetable of the 'calling-party-pays' mobile billing policy. Uncertainty about China's policy risks and worries about the mainland government's lack of transparency in its policy-making process remained, they said.

Confusion about the mainland's policies has also extended this week to the cable television industry, after government officials were reported as making conflicting statements on whether the industry would be opened up to foreign investment.

The MII's attempt to clear up confusion in the telecoms sector sent the share prices of China Mobile (Hong Kong) and China Unicom - China's two SAR-listed telecom operators - up sharply.

China Mobile, the dominant mobile operator, rose HK$3 or 7.04 per cent yesterday to finish at HK$45.60, with HK$2.6 billion worth of shares changing hands.

Rival China Unicom jumped 15.32 per cent or HK$1.70 to close at HK$12.80.

Both counters were heavily traded, together amounting to HK$3.86 billion, or 31.5 per cent of yesterday's total market turnover.

Analysts said Mr Wu's clarification on the one-way billing policy would help to boost the prices of both China telecoms stocks in the near term because of short-covering.

'It is obviously good news for China Mobile and China Unicom,' said Morgan Stanley Dean Witter telecommunications analyst Hani Abuali.

'In the near term, it appears the regulatory risk has abated. However, the country risk remains an issue for investors that should not be overlooked.'

He said regulators should make their intentions more visible.

A fund manager also said the government's attempt to clear up the confusion 'is positive in that at least it showed the Chinese government has become more sensitive about the importance of transparency'.

'Investors and the government should have learned their lessons,' RBC Investment Management (Asia) chief investment officer Philip Chiu Sai-tong said.



China moves to calm investors