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Telecom Market Inefficient in China
2005-8-8 22:04:19      Xinhua
Inefficient investment in China's repetitive telecom infrastructure construction has reached as much as tens of billions of US dollars, the Economic Information Daily (EID) reported Monday.

Investment in 3.6 million kilometers of optical fibers by China's leading telecom giants, had reached approximately 130 billion yuan (about 16 billion US dollars) by the end of 2004, but only 10 percent of their capacities were put to use, according to an in-depth report of the newspaper.

And if the telecom companies share one-third of their existing transmitter towers, some 24 billion yuan (nearly 3 billion dollars) of investment could be saved, Yang Xianzu, former chairman of China Unicom, was quoted as saying.

He blamed China Mobile and China Unicom, the two biggest domestic telecom firms, for building infrastructure separately because of the lack of a cooperation mechanism.

To seize for a bigger market share, domestic telecom firms are in vicious competition, squeezing their profit margins, the paper acknowledged. "If the trend continues, the industry as a whole would probably slide into the red just in a couple of years."

The average return on equity of China Mobile, China Unicom and China Telecom had dropped to only one-third of that of their Spanish counterparts and half of those in Mexico in 2003, the Economic Information Daily said.


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