The telecoms minnow is cut free from the rail ministry but still faces a struggle
When then-premier Zhu Rongji proudly announced the birth of China Railcom on Boxing Day 2000 in Beijing, he said that within three years it would do one of two things: list overseas or merge with China Unicom, the country's second-largest mobile carrier.
Three years have passed and the company has done neither. It remains a marginal player in China's booming telecommunications market, with revenue share of less than 2 per cent. The second smallest of the six national players, it sits ahead of China Satcom but far behind China Mobile, China Telecom, China Unicom and China Netcom.
This week, Beijing officially announced that Railcom had split from its parent, the Ministry of Railways, to become an independent company - China Railway Communications Group - reporting to the State Assets Supervision & Administration Commission.
The terms of the divorce are unfavourable to the ministry, which receives no compensation for its 51 per cent stake in the company, which had assets of 35 billion yuan at the end of last year.
The ministry becomes merely a customer, albeit a large one, of the new entity, which will remain the only firm providing optical cables to the rail network.
Railcom is being forgiven a portion of the domestic debt it incurred when it was established and the ministry is being forced to assume all the foreign debt it has incurred. Furthermore, the ministry must bear the cost of expanding the Railcom network and hand it over to the company once the work has been completed.