By staff reporter Ming Shuliang

China Telecom Co. Ltd. (HKSE: 00728), China’s largest fixed-line carrier, announced July 31 that its parent company China Telecom will conclude the takeover of China Unicom's Code Division Multiple Access (CDMA) mobile network before December 31, under the country’s recent reshuffle plan of telecom industry.

China Telecom said in a statement that the company will sign agreements concerning the transaction details with all of China Unicom's subsidiaries by August 15.

"(The progress) will be even faster than expected." said a senior manager from China Telecom's Guangdong subsidiary.

According to a source from a mobile equipment maker, China Telecom's purchase of CDMA mobile phone is set to conclude by the end of September. If the progress goes successfully, China Telecom may start to provide CDMA services as early as October. 

An analyst from AJ Securities said that China Telecom intends to start CDMA operation soon in order to boost the development of the current stagnant CDMA business. Moreover, both China Telecom and China Unicom hope to successfully accomplish the reshuffle and obtain 3G mobile services licenses as early as possible. In doing so, they hope to compete with China Mobile in the wireless communication market.

China Telecom has been ambitious in exploring the wireless business. Wang Xiaochu, president of China Telecom said July 29 that the company expected its CDMA customer to reach 100 million in three years. To reach this goal, China Telecom will invest more than 80 billion yuan in CDMA projects.

China Telecom is eyeing CDMA revenue to top 71.4 billion yuan and 125 billion yuan in 2009 and 2010 respectively. However, some analysts predict the target may be too ambitious for China Telecom to achieve since the mobile communications market has been slowing down after years’ rapid expansion.

Meng Jinhong, analyst from Merrill Lynch, said although the number of first-time buyers is rising, China’s telecom industry has been squeezed by decreasing communication fees.

In 2007, CDMA business created sales revenue of 32.6 billion yuan for China Unicom. However, China Telecom has been confident with the business outlook. "We have advantages in expanding the business due to the access to government and company customers." said the source from China Telecom Guangdong subsidiary.

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