HONG KONG, 7 AUGUST 2008 China Telecom has announced an agreement to purchase China Unicom's CDMA network, as guided by the Chinese central government's directive on telco restructuring in May 2008.
China Telecom will pay RMB110 billion (US$16.1 billion) in total: RMB66.2 billion (US$9.7 billion) to acquire the CDMA network and RMB43.8 billion (US$6.4 billion) for the acquisition of subscribers and related operations. China Telecom will begin the transfer of assets and launch commercial trial services in October.
According to a global advisory and consulting firm Ovum, China Telecom will most likely start offering 3G services in March 2009, by leasing network capacity from its parent company (China Telecom Group). On the positive side, China Telecom has the first to market advantage to launch 3G services or even FMC service bundles in China. On the other hand, it faces very keen competition in mobile service market differentiated value proposition of CDMA services.
CW Cheung, Consulting Director at Ovum, said: China Telecom will face considerable challenges in three areas: (a) product development and service offerings; (b) customer segmentation and market positioning; (c) customer service transformation (shift from fixed location to on-the-move customer care).
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