China Unicom to buy China Netcom

Last month, the Chinese government ordered changes in the country’s telecommunications sector. The plans call for the country’s six telecommunications companies to combine into three groups. The move in meant to create a more competitive atmosphere and stop one operator from monopolizing the market. Pursuant to this mandate, China Unicom announced today that it will buy the fixed-line operator China Netcom for $23.8 billion (185 billion Hong Kong dollars).

China Unicom, the second largest mobile operator in the country, also announced to would sell the code division multiple access, or CDMA, mobile network and accompanying business to China Telecom for $15.86 billion. China Telecom is China’s largest fixed-line operator.

These sales and acquisitions are meant to make China Unicom and China Telecom more competitive with China Mobile. China Mobile has more mobile subscribers than any company in the world. China Telecom hopes to expand its new mobile business with its current fixed-line subscribers and China Unicom is hoping to grow its current mobile business with its new fixed-line subscribers.