bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

helpersCheckIsPostiesArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

moreOnThisArticles

urlAlias

commentCount

authorLocations

authors

corrections

sponsorType

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

socialHeadline

headline

flag

firstTopic

glossary

flattenTypeIds

publishedDate

additionalInfoBoxes

quizIds

images

image

relatedLinks

relatedNewsletters

__typename

createdDate

sponsor

paywallTypes

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

Mainland fixed-line operator seeks to buy GSM unit to launch mobile business

Shares of China Netcom Group Corp, the mainland's No2 fixed-line operator, jumped as much as 6.05 per cent yesterday after the company said it was interested in acquiring the GSM mobile network of China Unicom through a share swap.

Zuo Xunsheng, the chief executive of Hong Kong-listed  Netcom, and chief financial officer Li Fushen told an analysts' luncheon that the company was more interested in operating Unicom's GSM service, a European-based mobile service, than its United States-based CDMA service.

The proposal indicated that  Netcom might be awarded a European-based WCDMA third-generation mobile-telephone licence, an analyst said after the lunch meeting on Wednesday.

Obtaining a 2G network such as Unicom's GSM operations would help serve as a base for building up a 3G business.

The shares closed yesterday up 92 HK cents or 4.84 per cent at HK$19.92 after reaching a high of HK$20.15, outperforming the benchmark Hang Seng Index's 1.63 per cent gain.

The mainland government is widely expected to issue at least three licences  for 3G networks this year, with two to be based on international technologies already in use overseas and one on the country's home-grown TD-SCDMA standard.

China Telecom Corp, the country's larger fixed-line operator, might get a CDMA 2000 standard and China Mobile would promote the TD-SCDMA standard, an analyst said.

Unicom, which has about 107 million subscribers to its GSM network and 37 million to its CDMA network, is not widely expected to win a 3G licence.

Netcom 'indicated that it is not interested in  Unicom's CDMA assets, but rather in its GSM operations', said BNP Paribas analyst Marvin Lo, citing  statements from Mr Zuo and Mr Li.   'Netcom said it could settle the transaction by issuing new shares to Unicom.'

The transaction would require the approval of both companies' shareholders,  Mr Lo said.

If the share swap came about, it would imply a merger of  Netcom and Unicom, with China Telecom possibly acquiring Unicom's CDMA assets, Mr Lo said.

Unicom is at present undergoing a restructuring that involves separating its GSM and CDMA operations, which were previously served by a single team.

A Unicom representative  declined to comment.

The company's CDMA network is held by its unlisted parent firm, China United Telecommunications Corp, which might lead to a deal between it and the unlisted parent company of China Telecom, Mr Lo said.

'China Telecom's management has also expressed in public they would be happy if they had CDMA operations, as the most important matter for China Telecom and Netcom is to get 2G licences,' he said.

A 2G licence would give the two fixed-line operators a subscriber and network basis for building up a 3G network.

Netcom was more likely to be awarded a 3G licence in either the second or third quarter of this year than earlier, the company said at the lunch meeting.



China’s Hainan offers global internet access to some to boost free-trade port ambitions

Tech war: US curbs on global use of Huawei chips add uncertainty to China’s AI investment

China-backed actors ‘stand out’ in threatening US energy infrastructure, panel hears

US FCC probing if Huawei, other Chinese firms are seeking to evade curbs

China Unicom

Netcom pins 3G hopes on Unicom network