Published: Fri, September 07, 2018
Technology | By Lionel Gonzales

China explores merging China Unicom, China Telecom

China explores merging China Unicom, China Telecom

The country is ahead in the global development of 5G networks, which are expected to be at least 10 times faster than 4G, and aims to roll out commercial services as early as next year, Yicai Global reported in March.

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. The current argument for a merger between the two is based on the ability of a combined company to more easily make the huge investments required to build out a 5G network.

China Unicom claimed to be unaware of the proposal when contacted, while China Telecom made no comment.

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.

China's had its share of setbacks during its campaign. This would strengthen their position in the mobile market versus market leader China Mobile and support quicker development of 5G in China.

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Forget whether three is better or worse than four, in China the question now being debated is whether two is better or worse than three. However, a fomenting trade war with the USA has made expediting 5G development a priority. While the company has resolved the issue, Huawei is also unable to sell telecoms equipment in the U.S. due to security concerns, and Australia has banned both countries from tendering for 5G contracts. Because of the "well-known United States national security concerns about Huawei and other Chinese telecommunications companies, a shift to Chinese dominance would have substantial negative national security consequences", it said.

"We don't see any rationale for a merger of the two", Steven Liu, an analyst at China Securities International in Hong Kong, wrote in a note on Tuesday.

Asia, according to telecom industry body GSMA, will be the largest 5G market in 2025 - driven by China, Korea, Japan and Australia.

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.

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