China Economic Review

China considers merger of state telecoms giants

A landmark merger between two of China’s three state-backed wireless carriers could be in the pipeline, sources told Bloomberg, a move which could boost the country’s 5G capacity in its race against the US for global leadership.

The fusion of China United Network Communications Group Co. and China Telecommunications Corp. is already being considered by government regulators, the sources said. The merged entity would boast a customer base of over 590 million, making it the second largest mobile operator in the world behind China’s other major player, China Mobile.

The deal is being posited as a potential catalyst for the government’s 5G ambitions, with a larger firm benefiting from scale efficiencies in terms of technology investments, according to the sources. The technology has moved to the forefront of tensions between China and the US, with President Donald Trump blocking Broadcom’s buyout proposal of chipmaker Qualcomm earlier in the year on the grounds that the deal might lead to the US company reducing its R&D spending.

Executives from both companies have been reluctant to provide updates on the progress of the deal, most recently denying knowledge of any merger taking place.