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China Unicom and China Telecom denied foreign media on merger to joint-develop 5G

CKN
minutes 2018/09/06 01:03:23
2,015
China Financial News, China News, China Telecom, China Unicom

Sep 06, 2018 (China Knowledge) - China Unicom and China Telecom have officially denied a reported merger from foreign media. Tuesday’s report had caused a sudden rise of shares prices of both telcos listed in Hong Kong Stock Exchange (HKEx).

On September 4, Bloomberg cited people familiar with the matter as saying that Chinese government is exploring a merger of two telecom giants to speed up the development of 5G mobile services.

China Unicom has not received any notice from Chinese government, according to a statement on its official Weibo account. China Telecom also denied any knowledge of recent reports of a possible merger, The Paper reported.

If the merger happens, these two companies will able to rise their combined market value to almost USD 80 billion, and a combined mobile-subscribers of more than 590 million, a number that would be second to China Mobile, among wireless service providers worldwide.

China aims to become the world’s leading manufacturer of telecommunication under its Made in China 2025 strategy. With trade tension escalating with the U.S., it will not be a surprise for the American side to hamper China’s progress in 5G development.

The first to develop 5G will have their intellectual property rights (IPRs) engrained in the international standards, giving the country and companies huge commercial advantage. The China Academy of Information and Communications Technology (CAICT), has estimated that the development of 5G will drive RMB 6.3 trillion in Chinese economic output by 2030 and create 8 million new jobs domestically.

Besides that, the first to develop the standardised technology will have a deeper understanding and knowledge about how the technology works, including any vulnerability that might be presented. 5G technology will enhance the performance of Internet of Things (IOT) products, where demand for such products is on the rise. As these products will rely heavily on 5G technology to transmit and receive data, any vulnerabilities in the 5G technology will be amplify in such products. Security risks are concerns of many with the advancement of the technology and products to be introduced in the future.

China Unicom <0762.HK> shares price rose 5.8% on Tuesday from previous close at HKD 9.58, and China Telecom <0728.HK> up 4% in a day closing HKD 3.89. Both stocks fell yesterday to close at HKD 9.25 and HKD 3.85, respectively, after the rumours were officially denied by the telecom giants.

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