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China Mobile and Tietong Merger May Be Delayed Indefinitely

CCTIME, 11/06/09

According to knowledgeable sources, China Tietong's plan to merge with China Mobile (NYSE: CHL; 0941.HK) may be delayed indefinitely. According to merger plans released on February 9, 2009, the merger was supposed to proceed in three stages. The first stage was from January to June 2009, in which both parties would explore modes of cooperation while focusing on actual cooperation channels, taking advantage of Tietong's channels to promote China Mobile's services. The second stage would run from July to December 2009, during which China Tietong's services would slowly begin delivery via China Mobile's channels. The third stage would begin in 2010, in which the two companies would be cooperating fully and creating an integrated channel based on both mobile and fixed network operations. However, as of now, this cooperation has yet to begin.

In August, sources from China Tietong's senior management revealed that the company was in the process of splitting up its public and private network operations. At the time, China Tietong and China Mobile had reached an agreement under which the public network personnel and resources would merge into China Mobile, while the private network operations would remain part of China Tietong, and Tietong's public network personnel would help China Mobile launch fixed-line services.

Editor's Note: For more background on this topic, please see "Rumor: China Mobile to Keep Tietong Separate from Listed Firm" MD 1/17/08 and "China Mobile, Tietong to Integrate Wireless Broadband Businesses" MD 8/07/08 issues.

Keywords: China Mobile China Tietong fixed-line broadband telecom wireless CHL 0941.HK restructuring

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