More work to be done in improving services, coverage
Chinese regulators are considering deepening reforms in the telecom sector, but have not yet made any plans for industry consolidation, an official from the Ministry of Industry and Information Technology (MIIT) said Thursday.
Development of companies should be in line with market demand, Zhang Feng, a spokesman for the MIIT, said at a press conference in Beijing. Regulators will continue carrying out reforms in the telecom industry, but no work related to merger and acquisition (M&A) deals has been done yet, Zhang said.
While market speculation about a possible merger among the three carriers was circulating Thursday, shares in China Unicom surged the most, rising by 6.96 percent in Shanghai. In Hong Kong, shares in China Mobile rose 0.26 percent, and those in China Telecom jumped 1.2 percent.
A possible merger among the three State-owned carriers - China Mobile, China Unicom and China Telecom - could have an adverse effect on competitiveness as it would push the sector even closer to being a monopoly, Xiang Ligang, a Beijing-based independent telecom analyst, told the Global Times Thursday.
"The country's telecommunication services sector has been striving to develop through restructuring and combining small-sized operators into larger ones," Xiang said, noting that the three top carriers are unlikely to be merged as the government wants to encourage greater competition.
Zhang said at the press conference that the three State-owned telecom operators still have more work to do in providing cheaper and faster Internet services, as well as in improving broadband coverage.
One of the challenges operators are facing is completion of the Fiber-To-The-Home (FTTH) project, Liu Ruofei, general director of the telecom research center at Beijing-based CCID Consulting, told the Global Times Thursday.
"For example, when operators enter certain residential areas to carry out FTTH projects, some property management teams will charge a so-called 'entry fee,' which can be really expensive," Liu said.
By the end of 2017, telecom companies will have invested more than 1.1 trillion yuan ($179.74 billion) in upgrading China's Internet infrastructure, with 430 billion yuan having been invested in 2015, media reports said in May. Fiber optic broadband speeds of 100 Mbps will be available to almost all urban families, with average broadband speeds reaching 30 Mbps in major cities, the reports said, citing the MIIT.
Liu noted that lower services fees could have an impact on the companies' profits, and as the top firms are listed this may become a major concern for their investors.
Miao Wei, minister of the MIIT, also noted during the press conference Thursday that the country's industrial output is expected to grow by more than 6 percent in 2015.
Although China's industrial sectors saw stable growth in the first three quarters of 2015, there are still challenges, said Miao.
He noted that as the country is restructuring its industrial growth model by moving from focusing on labor-intensive sectors to a model driven by innovation and advanced technologies, industries such as robots and high-end servers have recorded double-digit growth from January to September.
Still, industrial sectors have been facing significant difficulties recently, such as sluggish exports and investment, he said.
Profits at the country's large industrial enterprises - those with annual revenues of at least 20 million yuan - totaled 535.8 billion yuan in September, down 0.1 percent year-on-year, according to data released by the National Bureau of Statistics on October 27.
To achieve sustainable growth, further efforts need to be made to tackle industrial overcapacity, He Jun, an analyst with the Chinese Academy of Social Sciences, told the Global Times Thursday.
"We should focus more on restructuring in industrial sectors instead of pursuing double-digit growth," He said, noting that some companies will have to be eliminated because of the overcapacity problem.
