China Telecom and China Netcom Register Increase in Share Prices

A report stating that the Chinese government is looking to speed up plans to hand out permits for wireless operations saw two of the biggest fixed line telephone operators in China registering gains on their shares during trading in Hong Kong.

The two companies in question, China Telecom Corp. and China Netcom Group Corp., registered increases in shares of 4.6 percent and 5.5 percent, respectively, on the back of the report about granting of wireless permits.

While China Telecom Corp. shares closed at K$5.45 per share, China Netcom Group Corp. shares closed at HK$21.15. With this, China Telecom Corp. registered the biggest jump during a single day since November 14. Another Chinese operator, China Mobile Ltd., which is largest mobile phone carrier in terms of subscribers, saw share prices fall by 1.1 percent.

A report carried by the official Xinhua News Agency said regulators were looking to increase competition among fixed line operators by speeding up the granting of wireless permits to them. Xinhua said the report came from Vice Minister Xi Guohua from the information ministry.

By providing 3G wireless services to customers, China’s fixed line operators can look to increase their earnings. Earnings have slumped in recent times with subscribers canceling with them.

According to Wong Chi Man, an analyst at China Everbright Research Ltd., the 3G wireless permits would go a long way in helping fixed line operators improve on customer retention and also improve on new subscriptions.

China Telecom spokesman William Li issued a note through e-mail that they had received no notification from regulators regarding any decision to speed up the wireless permits. China Netcom spokeswoman Xu Song and Ministry of Information Industry spokesman Wang Lijian both refused to make any comments about the Xinhua report.

The Ministry of Information Industry had earlier, in January 2006, taken China’s time division synchronous code division multiple access (TD-SCDMA) standard as one of its 3G technologies. It has been working on developing trial networks across 10 cities, including Beijing and Tianjin. The ministry has not set any official timetable for issuing licenses.

Wong of China Everbright said it was unlikely the licenses for wireless would be issued before the Information Industry ministry completed its TD-SCDMA trials. He said those trials would probably be completed by the end of the year.