BEIJING—After months of prevarication, the Chinese government has decided to split the quasi-monopoly fixed-line operator China Telecom in two parts following geographical lines. Both the northern and southern split-offs of China Telecom may acquire mobile licenses, possibly next year.
The northern part will merge with China Netcom, which has built one of the world’s most advanced broadband networks. The as yet unnamed company will offer local, long-distance and data services in 10 provinces and municipalities.
China Telecom’s southern part will cover 21 provinces and municipalities.
The aim of the split-up is to spur competition in the marketplace, but analysts question the effectiveness of the measure, as both companies will retain a quasi-monopoly in their areas. Competitors China Unicom and China Railcom currently pose a weak challenge with a combined market share for local services of less than 5 percent.
The uncertainty over China Telecom’s future has prevented the company from launching shares on the Hong Kong and New York stock exchanges.
The combined revenue of China’s seven telecom carriers reached 217.6 billion yuan (US$26.32 billion) in the first eight months of the year, a growth of 23 percent compared with the same period last year.
