Unicom Considering Selling CDMA Network

Hong Kong newspapers are reporting that the locally listed China Telecom is offering to buy China Unicom's CDMA network in order to prepare for the issuance of 3G licenses in the country. The Chinese language, Hong Kong Economic Journal did not name sources, but noted that rumours about the possible sale of Unicom's CDMA network have been circulating for some months.

A source close to China Telecom said the company has not received any official notice regarding the purchase, but neither did it deny that talks are being held, the report said.

Andrew Sullivan, head of sales trading at Daiwa Securities SMBC Hong Kong Ltd, told XFN-Asia that China Mobile stands to benefit in a significant way if China Telecom's rumored bid for China Unicom's CDMA network materializes.

'The possible loss of China Unicom's CDMA network will significantly weaken its competitive ability even if it is eventually given one of the 3G licenses by the government. China Mobile will be a big beneficiary in this scenario, especially because it is widely expected to get one of the 3G licenses,' he said.

Conversely, while Unicom will see its subscriber base shrink significantly, the management could benefit from not having to run two incompatible networks."

Posted to the site on 14th August 2006