China close to revamping telecom sector

Speculation increased that Beijing is close to approving a long-waited telecoms sector overhaul that benefits fixed-line operators such as China Telecom , propelling their shares higher, a Reuters report said.

Shares in perceived short-term loser China Mobile fell, the Reuters report also said.

A restructuring of the industry, which also encompasses China Unicom and China Netcom , is seen as a precursor to the issuance of licenses to operate 3G services.

Such a move would kick off billions in spending for gear vendors such as Motorola and Nortel Networks, the Reuters report said.

Credit Suisse, citing a senior industry official and sector experts, wrote that the State Council, China's cabinet, was reviewing a restructuring plan submitted jointly by industry and government regulators and would soon unveil a decision, the report said.

It cited Yang Hua, secretary general of an industry alliance of TD-SCDMA vendors and operators, as saying Beijing could announce a decision on 3G licensing within days.

But Yang rebutted that report.

Other analysts however said the country's cabinet had met behind closed doors last week with the intention of thrashing out a years-overdue industry overhaul, according to the Reuters report.

Analysts have long speculated that regulators want to hive off parts of Unicom to its fixed-line peers. China Telecom or smaller rival Netcom will get each one of Unicom's two networks, becoming full-service operators, they say.

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