China unveils telecom restructuring

But it is expected to affect subsidiaries that have public shareholders abroad and create new commercial opportunities for equipment vendors such as Sweden's AB LM Ericsson, Franco-American company Alcatel-Lucent SA, China's Huawei Technologies Co. and Nokia Siemens Networks, a partnership between Finland's Nokia Corp. and Germany's Siemens AG.

The plan would have no direct effect on foreign carriers, which are barred from competing in China's telecoms market.

The mergers would set in motion the awarding of licenses for third-generation, or 3G, service that supports wireless video, Web surfing and other services, the government statement said.

Nokia and other suppliers are anticipating billions of dollars in orders for 3G equipment.

China has the world's biggest population of mobile phone users, with some 520 million accounts, and the government says that should reach 600 million soon.

The plan's rollout began Friday with the announcement that China Mobile's parent, China Mobile Communications Corp., will acquire China Railway Communication, also known as Tietong.

The plan also calls for China Telecommunications Corp., parent of China Telecom, China's main fixed-line carrier, to buy a mobile network from China United Telecommunications Inc., Unicom's parent company.

The rest of Unicom would be folded into fixed-line China Network Communications Group Corp., Netcom's parent. The remaining carrier, China Satellite Communications Corp. would be taken over by China Telecommunications.

In trading in Hong Kong, China Mobile shares fell 8.2 percent Monday on investor worries about greater competition. Its shares fell 3.8 percent Friday on speculation ahead of the weekend announcement. That means China Mobile's market capitalization has lost 304 billion Hong Kong dollars ($38.9 billion) since Thursday.

Trading of China Telecom, China Unicom and China Netcom shares in Hong Kong was suspended Friday pending the announcement of the restructuring and that stayed in effect Monday.