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China mulls Unicom-Telecom merger to advance 5G

07 September, 2018, 04:17 | Author: Rafael Roberts
  • A China Telecom public phone in Shanghai. Firm may merge with Unicom. Reuters

What happened: Two of the top three major telecommunications carriers in China are discussing a merger.

Some observers believe the planned merger is also being driven by the intense competition between the United States and the worsening trade war between the USA and China, which is causing expenses to skyrocket.

A merger between China Unicom and China Telecom would form a more formidable rival to China Mobile, which boasts more than 900 million subscribers, in the world's biggest mobile-phone market.

Two of China's three largest wireless carriers are reportedly discussing a merger.

China began research, development and testing of 5G in early 2016 and set this year as a crucial period to establish its standard and develop commercial products. The state agency that oversees China's state-controlled enterprises also refused to comment.

CT and China Unicom account for 19 percent and 20 percent, respectively, of the 1.49 billion mobile phone users in China. Conversely, leading the world in wireless brings significant economic benefits, as the USA has seen with its 4G leadership. Because new advances in technology typically pay huge dividends to the first mover, China apparently hopes to seize an advantage in shaping and controlling the development of 5G. Consolidation will leave only two firms:CT/China Unicom and China Mobile, which also an SOE.

"In addition, the government may allocate 60MHz of contiguous spectrum at 2.6GHz to T/U (below CM's current allocation), and 40MHz (above CM's current allocation) to CM so that CM can combine it with its existing 4G spectrum of 60MHz".

The deal would have left "an opening for China to expand its influence on the 5G standard-setting process", the Committee on Foreign Investment in the United States, or CFIUS, wrote in a letter dated March 5. The U.S. Federal Communications Commission reveals that U.S. 5G technology will be 100 times faster than 4G service.

The two USA carriers reckon at least $6 billion in cost savings resulting from a tie up, which they value at $43 billion today.

The Chinese government has been considering the merger of the two carriers for years but escalating tensions with the United States have raised the urgency of the matter.



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