Bottom line: Unicom and China Telecom are likely to strike a major new network sharing agreement next year, and could ultimately merge in 2017 if several pilot programs to liberalize China’s telecoms services market gain momentum.
Unicom studies resource sharing
Wireless carrier Unicom (HKEx: 763; NYSE: CHU) is giving the clearest signal yet of a coming shakeup in China’s telecoms space, with disclosure that it’s exploring a potential pooling of infrastructure resources with other companies. Word of the move comes in a bigger announcement from Unicom trumpeting the launch of its new 4G+ service, as it plays catch-up to archrival China Mobile (HKEx: 941; NYSE: CHL), which has been offering 4G service for nearly 2 years now.
Industry watchers are more likely to focus on Unicom’s network-sharing part of the announcement, which comes towards the end of the carrier’s brief new stock exchange filing. That’s because the disclosure marks the latest signal of a looming reorganization for China’s 3 state-run telcos, following rumors that began in the summer after a leadership shuffle within the trio. Read Full Post…
Bottom line: A plan to pool 4G network resources between Unicom and China Telecom could be a cost saving move, but could also be the latest signal that the regulator may ultimately merge the pair.
New signs of Unicom, China Telecom merger
China’s 2 smaller telcos are reportedly studying a plan to pool their 4G networks, in the latest sign that a major industry overhaul could be coming that would see the merger of Unicom(HKEx: 763; NYSE: CHU) and China Telecom(HKEx: 762; NYSE: 728). It’s hard to say what’s happening behind the scenes in China’s opaque telecoms sector, since any plans for such a merger are probably only known to regulators at the secretive Ministry of Industry and Information Technology (MIIT).
A high-ranking MIIT official said recently that he was unaware of plans for such a merger, indicating that nothing was imminent. But a growing number of signs are pointing to such a plan, though the cautious MIIT appears to be taking a very slow approach whose end goal wouldn’t necessarily be an outright merger but could instead also include a complex network-sharing arrangement. Read Full Post…
Bottom line: New signals that China’s 3 telcos are reducing their spending could presage a rumored consolidation of the trio into 2, with China Telecom and Unicom the most likely to be merged.
China telcos rope in spending
The latest sign of a potential shake-up in China’s stodgy telecoms sector came late last week, when global networking equipment giant Ericsson (Nasdaq: ERIC) attributed reorganization and weak spending by the nation’s big 3 carriers as a major factor behind its disappointing quarterly results. Despite expectation that China’s big 3 carriers would spend heavily on 4G this year, actual amounts so far have been relatively modest from the trio of China Mobile (HKEx: 941; NYSE: CHL), China Unicom (HKEx: 762; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA).
The unexpected spending slowdown could be the latest sign that Beijing is planning an industry overhaul, following reports that first emerged last month of a possible consolidation of the 3 current mobile carriers into just 2. Such a move would reflect Beijing’s disappointment at the failure of China’s state-run carriers to become global innovators over the last decade, even after receiving monopoly rights over a market that has become the world’s largest for mobile and broadband services. Read Full Post…
Bottom line: A new plan allowing customers of China’s 3 telcos to roll over unused data is being forced upon them by Beijing, and once again underscores the regulators’ frustration at their inability to innovate.
Telcos launch data roll-over policy
In the latest signal of just how uncreative China’s big 3 telcos are, the trio have all just simultaneously announced a major new move to boost data usage on their networks by lowering costs for consumers. It will come as no surprise that none of the 3 carriers are taking this step voluntarily, and instead are being forced into the move by the telecoms regulator. But that’s quite common for the uninspired trio of China Mobile (HKEx: 941; NYSE: CHL), China Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA).
Instead, it’s more interesting to note that this new move may represent the latest signal of Beijing’s growing frustration with a trio of companies that have become global laggards despite having a state-granted monopoly over the world’s largest telecoms market. That frustration could see Beijing soon decide to end the state-run monopoly, in an overhaul that would allow privately funded players into the market and perhaps even see a merger for 2 of the current big 3 telcos. Read Full Post…
Bottom line: The MIIT is quite possibly weighing a merger between China Telecom and Unicom, but any final decision might take at least a year due to the regulator’s cautious and slow-moving nature.
Marriage on tap for China Telecom, Unicom?
A new research note is raising the intriguing possibility that a merger could be coming for the smaller of China’s 3 big telcos, saying China Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA) may soon be forced into marriage. The reasons for such a marriage are certainly compelling, and a recent leadership shuffle among the nation’s 3 big telcos could point to such a move.
Some might argue that such a marriage would be anti-competitive, reducing China’s mobile space from 3 carriers to just 2. But the fact of the matter is that China’s telecoms regulator has become quite frustrated with this trio, who constantly fight among each other for market share but do very little to innovate despite controlling the world’s largest mobile market. Rather than focus its efforts on reforming this laggard bunch of state-run behemoths, the regulator has taken a number of other recent steps to bring more innovative, private investment into the sector. Read Full Post…
Update: Since writing this post, China Telecom and Unicom have both announced that they will swap chairmen. Wang Xiaochu will resign from China Telecom and become head of Unicom, and Chang Xiaobing will resign from Unicom and become head of China Telecom. (Unicom announcement, China Telecom announcement)
Bottom line: A rumored shake-up in the top ranks of China’s big 3 telcos is long overdue, but will only be effective if Beijing installs experienced, marketing savvy managers rather than the usual government bureaucrats.
Leadership shuffle coming at big 3 telcos?
I was largely dismissive of the first reports to emerge last week of a brewing shake-up for the leadership at China’s big 3 telcos, saying the basis for the speculation didn’t seem too solid. But the chatter continued to gain momentum at the end of last week, leading me to change my view and predict that perhaps much-needed change is on the way and could be announced soon.
The buzz began when media first reported that the telecoms regulator had called a meeting last Friday of top leaders of China’s big 3 state-run telcos, China Mobile (HKEx: 941; NYSE: CHL), China Unicom (HKEx: 763; NYSE: CHU) and China Telecom (HKEx: 728; NYSE: CHA). (previous post) Now media are reporting that the Ministry of Industry and Information Technology (MIIT) has called another meeting for Monday, and some are citing unnamed sources saying that the main topic is a big leadership shuffle. Read Full Post…
Bottom line: China Mobile’s return to profit growth is slightly encouraging but may be short-lived, while the MIIT isn’t likely to make any major new moves when it meets with China’s big 3 telcos on Friday.
Growth returns to China Mobile’s profit
After seeing its profits contract for the last few quarters, leading mobile carrier China Mobile (HKEx: 941; NYSE: CHL) finally wowed investors with an unexpected return to profit growth in its latest reporting quarter. But the euphoria was short-lived for China Mobile’s stock, which rose sharply after the report came out, only to give back all the gains by the end of the trading day. That would seem to show that investors are more worried about China Mobile’s top line revenue, which contracted during the quarter despite the profit growth.
At the same time, change could be coming soon for China Mobile and its 2 big state-run peers, China Telecom (HKEx: 728; NYSE: CHA) and China Unicom (HKEx: 762; NYSE: CHU), which have all been called to a meeting with the telecoms regulator on Friday. There are plenty of things the Ministry of Industry of Information Technology (MIIT) may want to discuss with these 3 slow-moving and bureaucratic telcos, but at least one media is speculating the trio could be getting set for some top management changes. Read Full Post…
The following press releases and media reports about Chinese companies were carried on August 21. To view a full article or story, click on the link next to the headline.
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China Smartphone Sales Fall for First Time: Gartner (English article)
P2P Lending Site Dianrong Raises $200 Mln in C-Series Funding (Chinese article)
China Mobile (HKEx: 941) Announces 2015 Interim Results (HKEx announcement)
MIIT to Convene Meeting of 3 Major Telcos, Leadership Change Possible (Chinese article)
Bottom line: China is likely to see 1-2 of its weakest major solar panel makers close over the next year in a campaign led by Beijing, with Yingli as the most likely candidate to make the first exit.
Yingli’s star grows dimmer
A couple of new reports from the Chinese solar sector are shining a spotlight on consolidation that’s still needed before the industry can return to health. One report cites the Ministry of Industry and Information Technology (MIIT), the sector regulator, saying more such consolidation is necessary and the pace should accelerate. The second is a technical announcement from Yingli (NYSE: YGE), the weakest among China’s major panel makers, saying it has fallen out of compliance with US listing requirements due to its low stock price.
The appearance of these 2 news items on the same day is purely coincidence, even though both are related to the same phenomenon. That phenomenon saw global solar panel production explode over the last decade, as scores of new plants opened in China in response to policy directives and other incentives from Beijing. Read Full Post…
Bottom line: After a slow start, China’s VNO program is showing signs of starting to gain momentum and could start to pose a meaningful challenge to the country’s big 3 mobile carriers by the end of next year.
VNOs move slowly but steadily
China telecoms regulator has just released some new data on the country’s virtual network operator (VNO) program a year after the first service launched, aimed at providing some competition for the country’s big 3 state-run telcos. While some observers are saying they’re disappointed at the data that shows China had 8.2 million VNO subscribers at the end of last month, I would actually take a contrarian view and say I find the figures somewhat encouraging.
Frankly speaking, I wasn’t at all confident that the VNO program would attract many subscribers at all. That’s because the program relied on cooperation from China’s big 3 telcos, which were required to sell capacity on their networks to these virtual operators, who would then sell service under their own brand names. The big and obvious problem lies in conflict of interest, since the big state-run telcos would hardly want to support these private companies that could quickly become major new competitors. Read Full Post…
The following press releases and media reports about Chinese companies were carried on July 18-20. To view a full article or story, click on the link next to the headline.
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AAFA Calls For New, Transparent Anti-Counterfeit Moves from Alibaba (NYSE: BABA) (press release)
Investors Prepare to Sue Dangdang (NYSE: DANG) Over Low Buyout Offer Price (Chinese article)
