New joint telecom venture in China might freeze 4G progress in the countryDaniel McCarthy (Author) Published Date : Jul 21, 2014 03:01 IST
Three state-owned telecom giants in China China Mobile, China Unicom and China Telecom formed a joint venture company in order to share infrastructure. This will allow the companies cut operational costs.
The joint ventured company has been named China Communications Facilities Services. The new company has registered capital of 10 billion yuan ($1.62 billion) of which China Mobile, China Unicom and China Telecom was authorized to 40 percent, 30.1 percent and 29.9 percent of shares respectively. The three carriers are considering the injection of certain telecommunications assets into the joint venture, they said in a statement though they didn t give more specific details. All three carriers said the new joint venture will help save capital expenditure and increase investment returns.
Analysts believe that the venture will decrease needless construction of iron towers and also related telecom facilities. According to company chairman Liu Aili the joint venture will also hoard investment of 30 billion yuan in the sector in the next five years.
The company will be open to private investment in about one year to 18 months and will develop a mixed-ownership structure later, said Liu.
On the other hand, analysts are saying that the new joint telecom infrastructure company could undermine the mobile giant s first-mover advantage in the speedier fourth-generation mobile services that China Mobile is betting on to turn around its operations.
According to the analysts, China Mobile would have less favor from the venture as smaller players China Unicom and China Telecom could potentially expand their network coverage quickly by sharing China Mobile s bigger pool of telecommunication assets.
As per the reports of Goldman Sachs, China Mobile owns 350,000 telecom towers and its smaller rivals China Unicom and China Telecom run 150,000 towers and 100,000 towers respectively.
Meanwhile Barclays said that China Mobile s coverage advantage could be eliminated eventually by the joint company.
New joint telecom venture in China might freeze 4G progress in the country