Boston, MA 05/06/2014 (wallstreetpr) – China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) is a $37 billion business that provides fixed-line and cellular telecom services. The company also provides broadband and other Internet services. It is among the smaller state-controlled telecom carriers in China that are likely to benefit from a wave of industry changes expected to shakeup the country’s telecom landscape.
The Chinese government believes that subscribers are best served when competition is high among operators. As such, the government is keen on introducing policy changes that will allow smaller operators to compete fairly with the giant rivals. On that note, China Unicom and China Telecom are, therefore, waiting on the wings to benefit from the policies that are likely to dilute the dominance of China Mobile.
Infrastructure sharing
The Chinese government is piling pressure on carriers that include China Mobile, China Telecom and China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU) to form an independent joint venture company that will manage their telecom infrastructure in China. The joint venture will also acquire and build telecom towers in China. However, that move will effectively reduce the dominance of China Mobile that already has the biggest number of telecom towers.
The planned joint venture among the three carriers will enable the smaller operators to easily expand their coverage without huge capital investment. Further, the sharing of towers will also support faster rollout of network upgrade for China Unicom and China Telecom that are still operating the 3G mobile network.
Mobile portability
In addition to opening up room for fair competition among carriers through infrastructure sharing, the government is also planning to introduce mobile portability system that would allow subscribers to easily switch operators without losing their mobile numbers. That move is likely to support China Unicom (Hong Kong) Limited (ADR) (NYSE:CHU)’s subscriber acquisition. Moreover, the government plans to dilute interconnection fees that smaller operators pay to bigger rivals for connecting calls to their networks. The reduced interconnection fees are expected to cut costs for China Unicom and its peer China Telecom that they can then channel into finance their marketing campaigns and network upgrade.
