An expectation that China will issue 3G licences to only three out of the four major telecommunications players next year has led to various versions of how the sector will be restructured.
Since last year, share prices of the four telecoms counters have moved on reports of an imminent reform of the 500 billion yuan (in revenue) industry. A Sina.com news report on Tuesday was the latest trigger for renewed speculation, resulting in sharp share price gains for China Unicom.
The nut of the report was that six basic telecoms service operators will be merged into three mega groups. The scenario has China Telecom getting China Unicom's GSM network plus the northern assets of small fixed-line carrier China Railcom. The second group will emerge from China Mobile absorbing China Satellite Communications Corp (Satcom). Railcom and Satcom are not listed.
The third group would involve China Netcom merging with China Unicom's CDMA network and the southern network of Railcom - to create a 'new China Unicom'.
The report did not state which firm would be eaten and who would do the gobbling, but Unicom shares rose on the suggestion that Netcom would be the one getting bought.
The claims were quickly denied by company executives but industry watchers are convinced radical reform is in the offing especially since the government is committed to making 3G services available by the 2008 Olympics.
This timetable means that licensing must be completed by 2006, according to CLSA telecoms analyst Francis Cheung.