China Unicom and China Telecom announce agreement to combine resources
China’s No. 2 and No. 3 mobile carriers China Unicom and China Telecom have reportedly signed an agreement to share resources in their attempt to battle the market’s No. 1 operator China Mobile.
The partnership is set to cover network sharing of LTE equipment in rural markets; the backing of a six-mode handset as a national standard for high-end mobile devices; joint negotiations on international roaming rates; pooling resources to improve network quality and customer experience; and the development of new ventures targeting market growth. The deal is also set to involve joint financial backing, though the exact amount has not been released.
Bernstein Research told Barron’s Asia plans to cooperate on the rural LTE build out could result in capital expense savings of up to 40% compared with building alone, with operating expense savings of up to 50%.
China Unicom served nearly 287 million total customers at the end of November, including more than 180 million customers on its 3G and “4G” network. However, the carrier has been consistently losing subscribers over the past several months.
China Telecom said it served 196.6 million total customers at the end of November, including 141 million on its 3G and 4G networks.
Both operators combined serve just over half that of larger rival China Mobile, which ended November with more than 825 million wireless customers, maintaining its position as the world’s largest mobile operator. China Mobile counted more than 287 million customers as using its 4G network.
All three entities last October completed the transfer of 231 billion yuan ($36 billion) worth of telecommunications towers and related assets to their China Tower joint venture. The three operators formally agreed to create the new company in July 2014, with the main goal of reducing duplication of telecom towers and other related infrastructure. China Tower will be responsible for the construction, maintenance and operation of telecom towers across the country.
China Mobile owns a 38% stake in the joint venture while China Unicom and China Telecom will each have about 28%. The remaining 6% will belong to state-owned China Reform Holdings. China Mobile said it will transfer assets worth 116.4 billion yuan to China Tower, while China Unicom and China Telecom will transfer assets worth 63.2 billion yuan and 34.3 billion yuan, respectively.
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