China Netcom Group has moved a step closer to a merger with Little Netcom after reaching an agreement to integrate the two companies' operations in northern China. However, an equity merger is not part of the agreement between China Netcom and China Network Communication Corp - also known as Little Netcom. 'What we're doing now is incorporating certain business operations and networks,' a China Netcom spokesman said. He was unable to say when the companies might resolve the equity issue. Last week, they reached a ground-breaking agreement through which Little Netcom will merge its businesses in 10 northern provinces into China Netcom. Under the plan, Little Netcom's subsidiaries, staff, networks, assets and customers in those provinces will be integrated into China Netcom's local branches. 'This is a very important part of the group's reshuffling scheme. The objective is to achieve effective integration of resources and improve efficiency,' China Netcom Group said. The breakthrough also takes China Netcom a step closer to a planned initial public offering.