China Telecom, Chinas largest fixedline phone provider, has announced plans
to buy regional phone operator Beijing Telecom for $793m.
The governmentcontrolled former monopoly, which still owns about 70 per cent of
Chinas fixed telephone lines, has struggled to cope with a rapidly evolving
market and competition from mobile phone operators.
Due to intensifying mobile substitution, China Telecom experienced negative
growth in access lines in service for the first time [in 2007], and voice
business revenue decreased by 7.9 per cent from 2006, the company said in a
Charice Wang, an analyst at research firm Ovum, explained that China Telecom has
been facing strong competition from China Mobile as customers switch to mobile
services under increasing fixedmobile substitution.
China Telecoms traditional voice business has been [declining in] recent
years, she said.
In its annual report for 2007, China Telecoms fixed voice subscribers fell
2.71 million to 220 million, and net profit was $3.20bn, a yearonyear increase
of just 1.1 per cent.
The move represents a reintegration of divisions at the former staterun phone
It is a good move for China Telecom to boost its bottom line and enlarge its
service coverage via the internal integration, said Wang.
It is not a new strategy for China Telecom to absorb the good performance arms
of its stateowned parent, China Telecom Group.
Back in 2003 and 2004, it acquired six and 10 provincial arms respectively to
achieve coverage of [the whole of] South China.
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