China's biggest fixed-line phone operator and its biggest mobile services carrier have signed a cooperation agreement aimed at easing competition and streamlining fast-growing networks.

In a statement Tuesday on its Web site, China Telecom Corp. said it signed a "strategic cooperation agreement" with China Mobile Communications Corp. last week that calls for the two huge companies to avoid duplicating their networks and to develop "rational competition."

The agreement, signed without fanfare March 23, comes amid government moves to restructure State-owned telecom companies to improve competitiveness and eliminate redundancies.

Last year, the government ordered top executives at three major telecom operators �� China Telecom, China Mobile (Hong Kong) Ltd. �� the Hong Kong-listed unit of China Mobile �� and China Unicom Ltd. to swap jobs.

The agreement between China Telecom and China Mobile calls for the companies'top executives to meet regularly. The two companies were also to cooperate in developing market strategies, it said.

"The two sides have committed under the framework agreement to operate under rational competition ... and use resources effectively to avoid overlapping of investment," China Telecom Corp. said.

The statement cited China Telecoms'chairman Wang Xiaochu as saying the two companies expected to make the most of their mutual strengths to improve services and boost their competitiveness.

China has a mobile penetration rate of 25.9 percent. The government began to introduce more competition to the industry in the mid-1990s by breaking up State-owned telecom monopolies.

In the past several years, the government has repeatedly denied rumors that it was planning a sweeping reorganization of the industry. The most prevalent theory has been that China Unicom, the second-largest mobile operator, might be disbanded or sell part of its operations to another carrier.

Source: Shenzhen Daily-Agencies