China Government is exploring a merger between China Unicom and China Telecom as part of the strategy to speed up the development of 5G mobile services amid a race with the US over the technology, Bloomberg reports.
Asia, according to telecom industry body GSMA, will be the largest 5G market in 2025 – driven by China, Korea, Japan and Australia.
China wants top position in 5G market. China holds a narrow lead over the US and South Korea in 5G readiness, thanks to proactive government policies and industry momentum, according to research firm Analysys Mason.
US President Donald Trump earlier blocked Broadcom’s bid to buy chipmaker Qualcomm due to the fear that China will try to dominate 5G space with the acquisition of US-based Qualcomm.
The combination of Unicom and China Telecom would create second largest telecom carrier with more than 590 million mobile phone subscribers behind China Mobile. The proposal being reviewed argues that a merger could speed up the government’s ability to push through its 5G ambitions because a combined company could make the necessary investments more easily than separately.
The Chinese government has been considering the merger of the two carriers for years but escalating tensions with the US have raised the urgency of the matter. US’s temporary export ban on ZTE, which nearly crippled the company because of its reliance on American technology, helped give China reason to make 5G development a higher priority.
Huawei Technologies, the world’s largest maker of equipment for networks, and ZTE were banned from selling their gear to a US ally, Australia, which cited security concern. Huawei and ZTE, which aren’t able to sell their network gear to US carriers as well, have disputed they represent any such risk.
A merger between China Unicom and China Telecom would form a more formidable rival to China Mobile, which boasts more than 900 million subscribers, in the world’s biggest mobile-phone market.
