Telecom licenses granted by MIIT

China's top telecommunications watchdog issued licenses to the first batch of domestic mobile virtual network operators on Thursday, an attempt to further reshape the country's telecom industry.

This move enables a total of 11 private firms - including e-commerce platform jd.com, cloud computing service provider net.cn, and Beijing-based communication service company DiXin Tong - to purchase mobile telecom services from the three State-owned telecom carriers and resell the services to consumers under their own brands, according to a statement released Thursday by the Ministry of Industry and Information Technology (MIIT).

As the parent company of net.cn, e-commerce giant Alibaba said in an e-mail sent to the Global Times Thursday that the license will help the company to offer customized telecom services to online shoppers and retailers, allowing it to further extend its e-commerce ecosystem.

Two home appliance retailers who had hoped to get licenses - Suning Commerce Group Co and Gome Electrical Appliances Holdings - failed to get on the list. According to media reports, Gome said it will continue to apply for a license.

Fu Liang, a Beijing-based independent telecom analyst, told the Global Times Thursday that some applicants did not obtain the license this time because they did not have the necessary documents.

"This is not a big issue, and we are very likely to see the second batch being granted in early 2014," said Fu.

In order to facilitate industrial transformation and upgrading, the MIIT is encouraging more private capital to enter the telecom sector.

In the statement, it pledged to accept further license applications before July next year.

Any firms that have signed a cooperation agreement with one of the three State-owned telecom carriers can seek a license, according to the ministry.

Data released Thursday by the MIIT showed that China Telecom and China Unicom had signed agreements with 16 and 14 private enterprises, respectively, by early November. The MIIT said it has not yet received any applications from firms that have tied up with China Mobile.

More firms will try to join the country's virtual network operating market, which is expected to be worth 20 billion yuan ($3.29 billion) by 2015, Xiang Ligang, CEO of telecom industry portal cctime.com, told the Global Times Thursday.

Fu said it could lead to lower telecom charges and improved services, thanks to increasing competition.

Although private enterprises have shown a lot of enthusiasm for the new business opportunity, analysts said they are unlikely to make big profits in the short term, due to the high operation costs involved.

"They still have to buy or lease the basic mobile telecom services from the three major operators and then sell the services to customers, since they don't have their own mobile telecom infrastructure," said Xiang.

Besides, the virtual network operators will have to put a lot of effort into marketing, so as to persuade consumers to use their own-branded telecom services, Xiang noted.

"I have no intention of subscribing to telephone cards sold by private firms unless they can provide better customer services and/or lower charges," Zhang Yu'nan, a 27-year-old resident of Shenyang, told the Global Times Thursday.

Fu noted that it will take virtual network operators at least five months to launch telecom-related products.