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China Unicom May Merge with China Telecom: FT

China Telecom, the China's largest fixed-line operator, may merge with mobile carrier China Unicom, as part of a long-awaited shake-up of the world's largest telecommunications arena, the Financial Times reports.

China Mobile, the country's largest mobile carrier, may also merge with No.2 fixed-line operator China Netcom, the Financial Times said, citing a source at China Telecom.

While China Telecom and Unicom are trying to avoid duplication in their Personal Handyphone System (PHS) units, the two companies could probably merge in time, the source was quoted as saying.

Meanwhile, China Telecom, keen to receive a license to operate high-speed third-generation (3G) mobile services, is eager to acquire or tie up with a mobile phone network, the source added.

A spokesman at China Telecom declined to comment on the merger report. Spokespeople at China Unicom and China Netcom could not immediately be reached for comment. China Mobile declined comment.

Beijing is pushing for a long-awaited revamp of its telecoms industry -- which will allow high-speed Internet access and third-generation multimedia phone services -- before the 2008 Olympic games.

In the restructuring, China Unicom is expected to be split, hiving off its CDMA network to China Telecom, and its GSM network to smaller rival, China Netcom.

The scenario would open up China's mobile sector in a boon to the fixed-line operators, who face high rates of mobile substitution and dwindling subscriber growth.

On Thursday, a China Telecom spokesman denied earlier reports that it was in talks with China Unicom to sell its CDMA network for around 110 billion yuan.

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