Published: Fri, September 07, 2018
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China considers merger of Unicom, China Telecom

China considers merger of Unicom, China Telecom

The country's top leaders are reviewing a proposal to combine China United Network Communications Group Co (China Unicom) and China Telecommunications Corp, Bloomberg reported, adding that no decision has been made and it's also possible that a merger may not happen.

5G is a next-generation high-speed wireless technology whose speeds are up to 100 times faster than the existing 4G service. Concerns that China could get the upper hand led to US President Donald Trump to block Broadcom's bid to buy chipmaker Qualcomm, in what would have been the biggest-ever acquisition in the technology industry.

Speculation swirled again on Tuesday that a merger of China's second- and third-largest mobile carriers is in the works, but if the news is true, one of the companies involved was apparently left in the dark.

Some observers believe the planned merger is also being driven by the intense competition between the United States and the worsening trade war between the US and China, which is causing expenses to skyrocket.

A merger between China Unicom and China Telecom could make 5G investment more attractive and easier, making the government's 5G goals more attainable. But it's hard to see China's state-owned enterprises wringing out such synergies. "As we head into another step up in the US-China trade war, we believe the State Council would be more eager to think fresh and more radically about how to accelerate 5G roll-out".

Verizon's 5G fixed wireless will launch in four US cities; AT&T will begin its millimeter wave commercial deployments this year; Sprint will launch in the 2.5 GHz band while T-Mobile's 600 MHz 5G launch will take place in 30 cities.

Why it's important: The reason behind the incentive is not just the numbers, it is 5G technology. While the company has resolved the issue, Huawei is also unable to sell telecoms equipment in the USA due to security concerns, and Australia has banned both countries from tendering for 5G contracts.

The United States will not get a second chance to win the global 5G race. China narrowly leads the United States due to "both proactive government policies and industry momentum", according to the firm's report. China Tower shares fell by a record 6.8 per cent on Tuesday.

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