Published on : Oct 16, 2015
The three main telecom operators in China has decided to pool assets, valuing US$36 billion, in China Tower Corp., their joint venture that was formed in 2014. China Mobile Ltd., one of the partners, has witnessed a significant rise in its stock price after this announcement.
The firm, which also boast of being the biggest carrier in the world by subscribers, has showed an upward movement of 2.7% and reach HK$93.70 per share in Hong Kong. This rise has been identified as the highest gain on this stock since Sep 22nd, 2015. Another partner, China Telecom Corp. experience a decline of 0.5%, whereas the third company, partnering in this venture, China Unicom Ltd. has also faced a drop of 2.8% on its stock price.
China Tower Corp. is aimed at reviving the situation of underperforming state firms in the nation. The administration of Mr. Xi Jinping, the president of the People’s Republic of China, has enforced to restructure the Chinese telecom industry, which accounts for a value of US$16 trillion.
As the country move towards its slowest as well as lowest rise in a quarter-century, the telecom operators are facing severe issues such as increased shift of consumers to mobile messaging tools such as WhatsApp and WeChat.
Ms. Cynthia Meng, a market expert at Jefferies Group, states that the completion of the long-awaited investment of assets in the tower project is likely to help in leveling the competitive landscape for relatively smaller operators. However, China Mobile is likely to maintain its dominance, owing to the magnitude of the scale.
China Mobile is poised to hold 38% share of China Tower Co. whereas China Unicom and China Telecom will possess around 28% each