China Mobile-Led Takeover Spurs Overhaul Hopes
China Mobile, the world's biggest wireless carrier, will take over Railcom and take in a clutch of executives from smaller rivals as hopes grow that Beijing has embarked on a long-awaited overhaul of the industry.
China Mobile Chairman Wang Jianzhou will head the larger, combined company, the Xinhua news agency reported on Friday. The chairman of Netcom, the smaller of the country's two fixed-line carriers, goes over to become party boss.
And a vice-president at Unicom, China Mobile's sole rival, is to become a vice-president at the larger company.
Analysts say Beijing has finalised plans for the much-touted but perennially postponed industry revamp, which could unleash billions of dollars in spending for gearmakers such as Motorola and Nortel Networks as new operating licenses spur development of wireless networks.
Any shake-up is expected to leave China with three industry giants rather than the present four. Fixed-line operators China Telecom and Netcom look set to benefit if they gain entry into the fast-growth mobile business, while China Mobile may face increased competition to its market-leading position.
Shares in Unicom and Netcom leapt more than 7 percent, extending gains on Friday after the China Mobile announcement on Xinhua. China Telecom climbed 5.3 percent while China Mobile slid 1.3 percent.
"There's been a lot of market talk already, and the shares did shoot up, but the overhang is still that the listco revamp will not happen right away, it's a complicated and time-consuming process," said ABN AMRO analyst Wendy Liu.
China Railway Communication was shifted from the aegis of Ministry of Railways in 2004 to the administration of the State-owned Assets Supervision and Administration Commission, which oversees most government-owned firms.