Changes seen unlikely to address Internet's structural impact
Shares of the three State-run telecom carriers slid on Monday following announcements of major management reshuffles.
Vice minister of Industry and Information Technology Shang Bing will replace the retiring Xi Guohua as the chairman of China Mobile, the country's largest telecom operator by subscribers, according to a Weibo post by the State-owned Assets Supervision and Administration Commission (SASAC) on Monday.
Meanwhile, China Unicom and China Telecom will swap their top leaders, with China Unicom Chairman Chang Xiaobing heading to China Telecom as chairman while China Telecom's Wang Xiaochu takes over China Unicom, according to SASAC.
China Mobile's shares posted the biggest drop, falling 7.93 percent to HK$92.35 ($11.9).
China Unicom closed down by 2.03 percent at HK$10.6, and China Telecom's share price dropped 6.45 percent, closing at HK$4.35.
The declines indicated that investors do not think the management reshuffles will do much for earnings, said Xiang Ligang, CEO of telecom news portal cctime.com.
"The growth slowdown is a structural problem. Telecom carriers can only find new growth points and compete with scrappy Internet companies in the era of the fifth-generation network after 2020 when the Internet is used to connect all things together," Xiang told the Global Times on Monday.
That "connection" is usually referred to as the Internet of Things.
The reasons for the changes were not disclosed, and none of the companies could be reached for further comment by press time.
"The periodic rotation of top bureaucrats at State-owned companies is normal in China as a method of preventing political networks from becoming entrenched and corruption from developing," Fu Liang, a Beijing-based telecom expert, told the Global Times on Monday.
The last similar reshuffle in the telecom industry was in 2004, and it also involved the same three managers.
Wang, who was then deputy general manger of China Mobile, became general manager of China Telecom.
Chang, deputy general manager of China Telecom, took charge of China Unicom as chairman, and Shang became president of China Unicom.
Meanwhile, China Unicom's general manager Wang Jianzhou was appointed as China Mobile's general manager. He left China Mobile in 2012.
That rotation in 2004 was reportedly intended to avoid excessive competition among the three companies.
This time around, analysts said, the move comes as the three carriers are trying to increase revenue from data services to offset a decline in the businesses of text messaging and voice calls, caused by the rise of Internet-based communications applications.
According to interim results released by China Mobile on Thursday, the company's revenue increased 5 percent year-on-year but net profit fell 0.8 percent to 57.3 billion yuan ($8.95 billion).
That compared with a 4.5 percent rise year-on-year in net profit at the smaller China Unicom, while the third-largest telecom carrier China Telecom saw the biggest yearly drop in net profit of 4 percent to 10.98 billion yuan over the same period.
Both Fu and Xiang said that new management thinking and reforms will be introduced into the telecom sector along with the leadership changes.
As for China Mobile, Shang may help boost its data services, which utilize the domestic TD-LTE standard, said Fu, noting that one of Shang's major tasks at China Mobile was to popularize that standard.
Since 2011, Shang, who has formerly held management positions in China Unicom and China Telecom, has been at the Ministry of Industry and Information Technology.
The ministry showed its determination to develop domestic fourth-generation (4G) networks with a statement issued early in May, which said that China will add more than 600,000 4G network base stations during the year.
