Wireless Federation

China Unicom’s CDMA network from October 1 will now be owned by China Telecom, reports a local news source.  CDMA assets to change hands include all ‘133’ and ‘153’ prefixed CDMA telephone numbers, CDMA transmission equipment, some sales outlets of China Unicom in ten northern provinces, CDMA terminals and other CDMA-related system and equipment. The assets will be paid in three stages by China Telecom; the first instalment will be of 70% which is to be made in three days of delivery, with 20% due within 60 days. The remaining 10% to be paid before March 31 2009. China Unicom will transfer 40% of it’s CDMA employees in the ten northern provinces to China Telecom; and rest 19.76% for the other provinces.

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China Unicom reportedly said, it expects a pretax gain of US$5.52 billion (CNY37.6 billion) from the sale of its CDMA operation to China Telecom Corp.

China Unicom said the sale price for the CDMA operation remains unchanged from the CNY43.8 billion price the company gave last month.

China Unicom said it will use the sale proceeds to expand its GSM network coverage and enhance information technology support systems, to prepare for the introduction of third-generation services.

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China Telecom, world’s largest telecom operator in terms of subscribers, in process of taking over China Unicom ’s CDMA network, has issued tenders for a network expansion. The key aim of the contract is to increase coverage areas rather than boost the quality of service in areas already under CDMA coverage. he initial contracts are expected to be awarded within a few weeks. According to the industry sources, the contracts are expected to be worth around US$4 billion.

Based on a recent study from the Ministry of Industry and Information Technology estimates 64million CDMA subscribers by 2012, whereas, China Telecom had originally expected a subscriber base of 100million by 2012. However, figures from the Mobile World database show that China Unicom ended Q1 ‘08 with just under 43 million CDMA subscribers.

According to the sources from telecom equipment companies, China Telecom, the to-be-operator of CDMA network, is scheduled to launch the CDMA mobile phones October 2008.

China Telecom, which is encouraged to take over the CDMA network from China Unicom, informed its plan to purchase CDMA mobile phones to device makers earlier in June. As per the sources, it is now working out on new CDMA customizing standards in order to ensure an abundant supply at lower prices for its subscribers.

Citing earlier reports, China Telecom has set a target of increasing the number of its CDMA subscribers to 100 million in 2009.In order to achieve this number and to expand the CDMA business, China Telecom plans to set up four new departments, namely individual user division, mobile service division, wireless network optimizing center and terminal customizing unit.

Around 1 million iPhones have been illegally unlocked and brought into China to work on China Mobile’s network, a telecoms analyst told China’s Interfax news agency this week.

Kevin Li, an analyst with In-Stat China, says the number of unlocked iPhones potentially in use in China has more than doubled in the last six months (from around 400,000 in December 2007), a figure that does not include iPhones adapted to work on rival mobile network China Unicom.

According to official statistics, Apple had shipped 5.4 million iPhones globally by the end of first-quarter 2008, which means the 1 million illegal China Mobile devices could account for a sizable proportion of all iPhones in circulation.

Negotiations between China Mobile and Apple over an official launch of the iPhone reportedly broke down over Apple’s insistence on securing a portion of China Mobile’s iPhone revenue.

While Apple has abandoned this model for the launch of the new 3G version of the device, there are still no official Chinese launch plans. “With so many iPhone owners already using China Mobile’s services and driving up data traffic, China Mobile is probably in no rush to officially introduce the iPhone in China,” Li said.

Meanwhile, the 3G iPhone will debut with various operators in 22 countries on Friday.

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China Telecom is courting foreign investors to help fund its plan to buy China Unicom’s CDMA mobile phone technology business, an AFP report, quoting state media said.

China Telecom said four or five companies have shown interest so far, the official Shanghai Securities Journal quoted China Telecom’s chairman Wang Xiaochu as saying.

Singapore Telecom, South Korea’s SK Telecom, and CDMA technology developer Qualcomm are among the possible partners, the report said.

China Telecom announced it planned to take over the CDMA business from China Unicom, the smaller of the nation’s two main mobile phone operators.

However, the deal will be costly at 110 billion yuan (€10.3 billion, US$16 billion), the AFP report said.

The acquisition plan is part of a long-anticipated shake-up of the country’s telecom sector aimed at increasing competition.

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 China Unicom, a provider of mobile telephone services, agreed to buy a fixed-line operator for $24 billion and sell a wireless network for almost $16 billion as China began an overhaul of its telecommunications industry.

The overhaul, announced last month after years of delays, is intended to speed up the introduction of high-speed third-generation mobile services for China’s 1.3 billion people.

The deals give the country’s largest fixed-line operator, China Telecom, a foot in the mobile market while Unicom, the second-ranked mobile operator, gets a fixed-line company, China Netcom.

The advent of third-generation mobile services will mean China’s phone users can join those in advanced economies who already have speedy Internet access, games and extensive multimedia content, from maps to music, on their mobile phones.

Unicom will issue slightly more than 10 billion new shares to buy China Netcom at a ratio of 1.508 to 1 share of Netcom.

The deal is worth about 186.7 billion Hong Kong dollars ($23.9 billion) based on its last closing share price of 18.48 Hong Kong dollars and assuming no outstanding Netcom options are exercised.

It also agreed to sell the smaller of its two wireless networks to China Telecom and its parent firm for 110 billion yuan ($15.9 billion).

“This is the only way China Telecom is going to get into the mobile business,” said Allan Ng, of BOC International.

Analysts said Unicom seemed to win out in both deals and noted that it is getting Netcom at almost a 4 percent premium to its market capitalization of about $23 billion.

Shares in China Unicom, Netcom and Telecom have been suspended since May 23, when the government announced a series of telecom sector leadership changes. They are expected to resume trading on Tuesday.

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China pressed ahead with a restructuring of its telecommunications market as mobile phone company China Unicom announced plans to take over a fixed-line provider and sell off a mobile business, an Associated Press report said.

The country’s No. 2 mobile operator said it would aquire China Netcom Group in a share swap valuing the fixed-line operator at €15.3 billion (US$23.8 billion). That represents a 3% premium over Netcom’s last closing share price, the Reuters report said.

Separately, China Unicom and its parent said they would sell CDMA mobile network and accompanying business to China Telecom and its parent for 110 billion yuan €10.1 billion (US$15.86 billion).

China Telecom is the country’s biggest fixed-line operator.

The moves were expected as part of a government-mandated shake up of China’s telecommunications sector unveiled late last month. That plan called for the country’s six telecom companies to combine into three groups in a bid to create a more competitive industry and prevent a dominant operator from monopolizing the market.

The deals could help China Unicom and China Telecom compete with the country’s cell phone heavyweight, China Mobile, the world’s largest mobile provider by subscribers.

China Telecom could expand its new mobile business with its current fixed-line customers; China Unicom could grow its current mobile business with the new fixed-line subscribers.

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China has unveiled its long-awaited telecom industry restructure, merging the six state-owned carriers into three.

But officials once more stopped short of setting a timetable for the introduction of 3G, saying that licenses will be issued after the restructure is completed.

In a revamp that has been widely reported since early this year, fixed-line leader China Telecom will acquire China Unicom’s CDMA business and China Satcom.

The new Unicom will be formed by combining its GSM business with the smaller fixed-line operator China Netcom. China Mobile, whose market dominance has driven the reforms, will take over China Tietong, a small fixed-line company set up by the Ministry of Railways.

Each of the three carriers will receive a 3G license, although no details have been issued on what kind of technology each will adopt.

The changes, jointly announced by the Ministry of Industry and Information (MII), the State Reform and Development Commission (SRDC) and the Ministry of Finance on Friday morning, are the biggest reforms to China’s booming telecom sector since the formation of the MII in 1998.

The statement said the rapid growth of mobile had created “new problems in the structure and resource allocation in the telecom industry”. The widening gap between the operators was making the competitive structure “seriously unbalanced,” it said.

Last year China Mobile posted a profit of 87.1 billion yuan ($12.5 billion) – almost half as much again as the combined profit of the Telecom, Netcom and Unicom.

Almost certainly the reforms were agreed on several months ago, but it has taken some time to agree on the sensitive appointments of top executives at the new carriers.

The senior positions in the state-controlled corporations are all Communist Party appointments.

Friday’s announcement confirms China Mobile chairman Wang Jianzhou and China Telecom chairman Wang Xiaochu in their current posts. China Unicom chairman Chang Xiaobing is head of the “preparatory group” driving the Netcom merger and should retain his post.

The most prominent move is that of Netcom chairman Zhang Chunjiang to China Mobile, where he becomes party secretary. Unicom president Shang Bing is the new party secretary at China Telecom, while China Tietong chief Zhao Jibin and Unicom vice-president Li Zhengmao will also become Mobile VPs.

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Beijing vowed to quell mobile phone spam messages on Sunday after seven advertising companies including Nasdaq-traded Focus Media were discovered to have sent commercial messages to practically half of China’s population of cell phone users without their consent.

The State Council, China’s cabinet, affirmed Sunday it is making a thorough investigation into the spammers, who were exposed by an investigative program on China Central Television earlier this month on the World Consumer Rights Day. Liu Yue, deputy head of the State Council Office for Rectifying Malpractice urged the parties concerned to intensify their “self-scrutiny to correct their wrongdoing, which is profit-seeking” that goes against the public good.

“Despite … the difficulties, we are determined to sort the problem out, which is closely linked with people’s interests regardless of the stakeholder behind it,” said Liu, according to state-run news agency Xinhua, which labeled the issue a “scandal.”

China’s Ministry of Information Industry is working with related departments to enact rules to restrict online and text advertisements, said Zhong Zhihong, a ministry official in charge of information security.

Beijing’s actions to crack down on spam messages came after a CCTV program revealed that advertising firm Focus Media Holding  possessed personal information pertaining to more than 200 million Chinese cell phone users, accounting for nearly half of the country’s 555 million mobile phone subscribers. Focus Media and six other online advertising firms were said to have transmitted junk messages to mobile phone users through the two principal network operators, China Mobile and China Unicom.

The issue caused a furor among the Chinese public, many of whom expressed concern that their private information might have been exchanged without their consent. Regulation to protect privacy is absent in China.

China Mobile, the country’s biggest operator, apologized on Wednesday for its management oversight that allowed it to serve as a conduit for spam, and it vowed to block commercial message briefs. Text messages have been the key income generator for China Mobile, whose 386.6 million subscribers sent 502.7 billion of them in 2007, up 42.3% from 2006.

Focus Media also apologized for the trouble it caused consumers last week. The company’s Focus Media Wireless subsidiary responsible for sending the mobile commercial alerts accounted for 9.2% of Focus Media’s total revenues. The company said it has set up an internal policy to ban sending messages without the recipients’ approval.

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