China Unicom, the country's second largest mobile carrier, is talking with Companhia de Telecomunicacoes de Macao (CTM), Macao's leading telecommunications service provider, about a potential purchase plan.

"The company is keeping in touch with CTM now for a potential purchase deal," sources close to China Unicom told China Daily yesterday.

However, details are not available.

It was reported yesterday that China Unicom has already received permission from regulators to take over 49 per cent shares of CTM and negotiations will start shortly.

CTM is a joint venture between Cable and Wireless PLC, Portugal Telecom International, CITIC Pacific Ltd and the Macao SAR Government.

Meanwhile, China Unicom is likely to contact Cable and Wireless PLC, which commands 51 per cent of the company's stake. Portugal Telecom International and CITIC Pacific occupies 28 per cent and 20 per cent, respectively.

CTM started its services in Macao in 1981 with the objective of providing high quality telecommunications services to the citizens of Macao.

As a total solutions provider, it delivers a wide range of business solutions and technologies, including basic telephony, Internet connectivity, network infrastructure design, customer installation, business applications development, project management, system integration, technical support and maintenance services.

The company has so far signed up more than 370,000 subscribers for fixed line and mobile telephones.

Its annual net profit stands at US$400 million.

"The deal will do good to subscribers both in the mainland and Macao as it is likely to greatly reduce the telecommunications cost between the two places," said Zeng Jianqiu, a professor with Beijing University of Post and Telecommunications.

"The deal is partly driven by the increasing business co-operation between the mainland and Macao," he said.

On the other hand, the purchase could be a strategic move for China Unicom to further carry out overseas expansion, Zeng said.

He said he believed that the country has already reached a post-WTO time of fiercer market competition between domestic and foreign companies. At the same time, domestic market operators are being encouraged to explore business overseas.

The potential purchase is also a reflection of China's commitment to WTO rules, Zeng said.

China is to fully lift regional restrictions on value-added telecoms services to foreign investors this year, according to China's commitment to WTO rules.

For mobile voice and data businesses, foreign shares can take no more than 49 per cent in joint ventures without regional restrictions.

Meanwhile, foreign investors are allowed to set up joint ventures in Shanghai, Guangzhou and Beijing to deal in domestic and international fixed-lines with a maximum share of 25 per cent.

"In fact, it will become a trend for domestic telecom carriers to go overseas to become more competitive," Zeng said.

Early in May, China Netcom announced a similar plan to purchased fixed-line telephone business from PCCW Ltd.

China Netcom hopes to combine PCCW's Hong Kong network with its own network in southern Guangdong Province.

However, the deal is yet be finalized.

Source: China Daily