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

Reported Merger Mystifies China Unicom, China Telecom

Reported Merger Mystifies China Unicom, China Telecom

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 United Network Communications, better known as China Unicom, said online yesterday it had noted reports about the alleged merger with China Telecommunications, but is unaware of the situation and has received no notice to that effect. A combination would produce a stronger challenger to the market leader, the $198 billion China Mobile.

The State Council, China's chief administrative authority which is led by Premier Li Keqiang, is reviewing the proposal to combine CT and China Unicom, both of which are state-owned enterprises (SOEs).

China wants top position in 5G market.

China's government is exploring a merger between two of its three state-backed wireless carriers to speed up the development of 5G mobile services, Bloomberg reported on September 4, citing people familiar with the matter. 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.

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

A merger would create the world's second-largest mobile operator, with almost 600 million customers.

Why it's important: The reason behind the incentive is not just the numbers, it is 5G technology.

China's had its share of setbacks during its campaign.

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. "Instead, we believe a merger of the two could disorder the industry's competitive landscape and restore monopoly and inefficiency". 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. (China Unicom), two of China's largest mobile-phone carriers, will be merged into one mega-carrier to lead China towards dominating the world with its 5G technology.

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