China Unicom-China Telecom merger considered

China Unicom-China Telecom merger considered

China Unicom-China Telecom merger considered

China Unicom's listed unit fell 2.4 percent to HKD9.35 (USD1.19) a share, while China Telecom lost 1 percent to HKD3.85. Their combined market value increased to more than $77 billion.

Speculation swirled again on Tuesday that a merger of China's second- and third-largest mobile carriers is in the works, but if the news is true, one of the companies involved was apparently left in the dark.

China is pushing to rival the United States in an arms race to dominate the next-generation 5G mobile networks, a technology seen as strategically important in both Beijing and Washington, especially amid increasing global trade tensions.

According to the companies' operating data, China Unicom had 302 million subscribers at the end of Q2 2018, while China Telecom had 282 million.

Earlier this year, the USA government blocked the proposed takeover of Qualcomm by Broadcom, fearing the latter's lack of reputation for research and development (R&D) would see the initiative ceded to Huawei, which is headquartered in Shenzhen, China.

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Huawei Technologies, the world's largest maker of equipment for networks, and ZTE were banned from selling their gear to a USA ally, Australia, which cited security concern.

Having just two operators in the Chinese market would indicate that the government is more concerned about pushing Chinese exports than fostering domestic competition, with most markets having at least three major operators. Huawei and ZTE, which aren't able to sell their network gear to United States carriers as well, have disputed they represent any such risk. However, a fomenting trade war with the USA has made expediting 5G development a priority.

Not everyone is cheering a potential merger.

Communications technology is part of President Xi Jinping's "Made in China 2025" programme to make the country a leader in a range of high-tech industries. China holds a narrow lead over the US and South Korea in 5G readiness, thanks to proactive government policies and industry momentum, according to a report by research firm Analysys Mason.

Visitors gather near a 5G stand of China Unicom during the Mobile World Congress (MWC) in Shanghai, China June 27, 2018.

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