China Mobile, Railways Ministry strike deal on Tietong

Robert Clark
16 Nov 2009

Eighteen months after China’s telecom industry reforms were announced, the last piece appears ready to fall into place with China Mobile and the Ministry of Railways (MoR) striking a deal on Tietong.

China Mobile and the ministry have agreed on a gradual transfer of assets and staff from the MoR’s loss-making fixed-line subsidiary, China Tietong, to the mobile operator, China Business News has reported.

Under the deal, China Tietong’s services and staff will progressively be transferred to China Mobile by the end of the year, becoming the mobile operator’s fixed-line arm. Some of the networking staff and management will transfer to the Railway Bureau’s electric systems group.

China Mobile and MoR have not confirmed the news, but it squares with the three-phase timetable set out by China Mobile in February.

It said then that following the “exploratory” phase in the first six months of the year, Tietong’s services would be gradually integrated into China Mobile in the second half of the year. The third and final phase next year would involve “all-round cooperation” with joint development of converged fixed and mobile channels and “full channel cooperation”.

Since the restructure was unveiled in May last year, China Telecom has taken over Unicom’s CDMA business and Unicom has acquired China Netcom, but until now Tietong’s absorption by China Mobile has made no progress.

This is partly due to Mobile’s focus on building out its new high-risk TD-SCDMA project as well as the cost and complexity of bringing Tietong on board. Because of its small scale, Tietong, which was set up to commercialize the MoR’s extensive fiber networks in 2000, has found it impossible to get funding and has accumulated billions of yuan in losses.

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