In the afternoon of 2008/6/2 (Beijing Time), the M&A process of the carriers in China started. China Telecom acquired the CDMA network asset for RMB66.2B and the CDMA business & user for RMB43.8B from China Unicom. The total value was RMB110B (about $15.7B). At the same time, the GSM business of China Unicom merged with CNC to form the new China Unicom, the trading value was over HK$430B (about $55.1B).
This was the first action to the carriers M&A announcement on 2008/5/23 which was intend to increase the competition in the telecommunication market and drive the speed to move to 3G. The M&A chart is as below, before the M&A there were 6 carries, 3 of them had landline network (China Telecom, CNC and China TieTong), 2 of them had mobile network (China Mobile and China Unicom which had both CDMA and GSM network), China Satcom has satellite communication. After the M&A, 3 big carries remain (new China Mobile, new China Unicom and new China Telecom), each of them have both landline and mobile network. The government will distribute each of them a 3G license after the M&A is settled down.
From a legal perspective, it will take at least 4 months for this M&A, it will take even longer for the whole consolidation. Since each carrier both has landline and mobile network, the competition will increase and the communication cost will go down, which will benefit the customers.
After this M&A, the rest 3 carriers will upgrade their network after they receive 3G licenses from the government later. Consumers and service providers have been waited so long for the 3G, finally it will come on the way after this M&A.
As the number of the mobile users is still growing fast and the requirement for high speed network service is also increasing. In the next decade, the carriers will invest huge money to upgrade their networks. In the long term, network device manufactures and client device manufactures, such as Alcatel-Lucent, Nokia-Siemens Networks, Huawei, ZTE, Datang and etc., especially QualComm will benefit tremendously for Chinese mobile users will purchase a large amount of 3G mobile phones with 3G chips containing IP from QualComm.
China as the biggest telecom market will attract even more capital from around the globe. J
