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NDRC Favors Splitting Unicom

Shanghai Securities News, 12/24/07

The National Development & Reform Commission (NDRC)'s Economic Systems and Management Institute has published a report on the structure and supervision of China's telecom market. According to the report, with no clear date for arrival of 3G licenses and multiple obstacles to company restructuring, priority should be given to a restructuring of services, with the four major operators to gradually be given full-service license, support offered to new entrants to the sector, and introduction of measures such as number portability to foster competition.

The report favors the break up of China Unicom, saying that "purchase of Unicom's mobile network would be the most effective and economic method of restructuring." The document suggests further opening of the telecommunications capital markets after the restructuring, attracting new capital to provide new operators the strength to compete with China Mobile.

However there is no support for a break up of China Mobile, as changing the current imbalance should not mean sacrificing the successful for the sake of those lagging behind. Adjustments to the market structure should focus on allowing positive aspects to remain in tact while optimizing overall growth of the industry.

Keywords: NDRC restructuring Economic Systems and Management Institute 3G license timetable full-service license number portability China Unicom CHU 0762.HK 600050.SH China Mobile CHL 0941.HK telecom wireless

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