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Issue of mobile licences may take longer time - expert

China Daily


China probably will not issue new mobile licences to fixed-line operators in the next two years, according to an AsiaInfo executive.

"I personally believe it is too early for China Telecom to get into the wireless business, at least not in the next two years," said William Ding, chief executive of AsiaInfo, which builds networks for mainland telecommunications operators.

"I also think the licences to be issued will be third-generation ones." Ding said.

Minister of Information Industry Wu Jichuan surprised the market earlier this month by announcing the latest deregulation plan for the industry, which will see the licences of four telecoms operators extended to cover fixed-line, mobile, broadband and other services.

The operators include China Mobile, China Unicom and the two companies to be formed next month by splitting dominant fixed-line operator China Telecom -- China Telecom and China Network Communications.

Wu said the plan would take at least two years to complete, but did not give a timetable for implementation, leaving open the timing and type of mobile licences to be issued. The plan aimed to enhance service quality and competition, and raise penetration.

The announcement has sent the share prices of Hong Kong-listed mobile operators China Mobile and China Unicom sharply lower, as fund managers regarded the lack of details on the plan as a policy risk to the operators' future profitability.

AsiaInfo chief strategy officer Bao Fan said China's mobile market was more competitive than it seemed as non-price competition in the form of rebates and rewards such as free bonus airtime had substantially lowered the effective tariffs.

"Competition in the mobile market has been very real, and not less than that in the international market. If there were no non-price competition, how come the operators' Arpus [average revenues per user] have fallen so much?" he said.

Though Ding said the deregulation plan would eventually result in more business opportunities for AsiaInfo, he did not see any such opportunities this year.

The Nasdaq-listed company saw a decline in orders from China Telecom in the third quarter of last year in anticipation of its planned split. Uncompleted orders fell from US$47 million at the end of September to US$44 million at the end of last year.

Last week, AsiaInfo announced a net profit of US$11.7 million for last year, compared with a loss of US$2.8 million.

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