Recently, China Mobile announced that it will spend at most CNY 32.88 billion to purchase the fixed network assets of China Tietong, a wholly owned subsidiary of China Mobile Communications Corporation. Industry insiders said that this would make up for the short board of China Mobile in fixed network, at the same time, it’s also China Mobile’s response to the extensive cooperation between China Unicom and China Telecom.
The statement of China Mobile said, it would purchase China Tietong through its wholly owned subsidiary China Mobile Tietong, the acquisition price was tentatively scheduled as CNY 31.88 billion and at most CNY 32.88 billion after negotiation. China Mobile will pay for the purchase by its own funds. According to the agreements, China Tietong owned branches in 31 provinces, autonomous regions and municipalities, after years of operation in the fixed network market, it has accumulated rich national backbone networks, city fiber networks, IPv4 address resources, housing and lands, and the fixed broadband users and fixed-line telephone users have both exceeded 10 million.
In the past, due to the market share of China Mobile was too large, it was put into asymmetrical regulation and failed to obtain the fixed network license. In 2008, the telecom industry went through restructure, during this stage, China Mobile merged with China Tietong while China Telecom obtained the CDMA operation license and China Unicom merged with China Netcom.
Considering China Mobile’s monopoly position in the mobile market, MIIT released the “Notice On Measures To Further Regulate the Order of Telecom Markets” in 2009 in order to balance the telecom market, the notice clearly pointed out that China Mobile can only launch wireless broadband access services by the TD-SCDMA network, while the fixed broadband business was authorized to China Tietong. However, China Unicom and China Telecom have both carried out full network business.
The ban expired at the end of 2011, added with the anti-monopoly investigation that the National Development and Reform Commission launched on China Telecom and Chinese Unicom, China Mobile has accelerated the pace to get its own fixed network license. Communication expert Liu Qicheng pointed out, China Mobile’s acquisition of China Tietong should have got permission to launch its fixed network business from relevant state departments; after this move, China Mobile will officially enter the fixed broadband market and make up for its short board in full network business development; in addition, the big data era also needs supports of fixed network, China Mobile has to pay a large amount of network clearing fees to China Unicom and China Telecom in the fixed network in each year, while this could be saved after acquisition of China Tietong.
In addition, Liu Qicheng said that this is also China Mobile’s response to the extensive cooperation between China Unicom and China Telecom. Last week, China Unicom said that it has initially developed the “suggestions on sharing of China Unicom and China Telecom 4G networks”, which proposed sharing path of resources and technologies including base stations, computer rooms and transmission, it also suggested the two giant groups to establish special working groups in the group, provincial and city levels to ensure the development of in-depth cooperation. This definitely formed larger competition pressure on China Mobile.