China explores merger of carriers China Unicom, China Telecom

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The combination of Unicom and China Telecom would create a carrier with more than 590 million mobile-phone subscribers, a number that would be second only to China Mobile among wireless operators worldwide. (China Unicom), two of China's largest mobile-phone carriers, will be merged into one mega-carrier to lead China towards dominating the world with its 5G technology.

China United Network Communications, better known as China Unicom, said online yesterday it had noted reports about the alleged merger with China Telecommunications, but is unaware of the situation and has received no notice to that effect.

According to a report from Bloomberg News, the government is considering a merger of China Unicom and China Telecom to speed up development and deployment of a 5G network. That's still a third less than the over 900 million at China Mobile.

But the suggestion that China would consider such a move serves to show how the race to 5G is as much about politics as it is technology. On Tuesday, Unicom said it isn't aware of a merger, a comment echoed by China Telecom. Although no confirmation has been given, the Chinese government has been considering the merger for years.

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China's main stock indexes fell over 1 percent on Wednesday, as investors dumped banking, property and resources shares amid fresh signs of anaemic growth, and ahead of a likely escalation of the Sino-U.S. trade war. For example, the US's recent temporary export ban on ZTE, which almost crippled the company because of its reliance on American technology, helped give China reason to make 5G development a higher priority, the proposal argues, according to the people.

Huawei has also been effectively frozen out of the United States market on national security grounds, while Australia has banned its telcos from procuring kit from the company.

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 USA and China, which is causing expenses to skyrocket. It may also raise concerns at recently listed China Tower, whose business model makes the company benefit from more carriers, not fewer.

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