Telecom Equipment News
- Too many ministries create telecoms tangle
Date: 13-Jul-2007 Sources: (People's Daily)
A surprise swap of senior executives of China's top four telecoms operators in recent days has reignited speculation that an industry consolidation is imminent.
The speculation is not out of place as ordering executives overnight to work for their rivals would be unimaginable in most corporate worlds.
The only plausible explanation seems to be that the swap is part of the preparations for a merger of some operators, to help executives get acquainted with the other companies' operations prior to the merger.
But a closer look at the roles of the executives reveals the swap, engineered by the powerful State-owned Assets Supervision and Administration Commission (SASAC), could hardly be a prelude to a possible restructuring.
In fact, almost none of the executives involved hold core management positions. They either focus on trade union issues within their companies or discipline inspection in the Communist Party of China, their responsibilities being much less linked to the core telephone businesses.
But such executive swaps still spark merger speculation, most likely between China Unicom and China Netcom, underlining the reality that the industry lacks transparency.
It's not the first surprise swap. In 2004, chief executives of the top four carriers were ordered to exchange their jobs. So were a deputy minister of information industry and the general manager of Netcom in 2003.
Some of the executives in that swap were caught just as off guard as the ones in the latest round, say insiders.
The swap was reportedly intended to 'reduce excessive competition', but on the contrary, sparked concerns about how effectively operators were competing with each other.
The Ministry of Information Industry (MII) has long been the telecoms watchdog while the SASAC has the right to appoint executives of State-owned companies as it is designated to oversee State-owned assets. But its increasing intervention in the telecoms industry has distorted the rules of the game even though the original intention was good.
The decision-making process in China's telecoms industry has never been as complicated as in recent years because of the involvement of an increasing number of ministries.
Disagreements have been for years stalling decision-making on several serious issues, including an industry consolidation and the licensing of next-generation mobile telephony.
Some MII officials have complained that the introduction of the caller-pay mobile phone scheme has been partly blocked by the SASAC for fear of loss of State assets.
A clear regulatory framework is urgently needed, otherwise the telecoms industry will be in a mess.
Sponsor Results:
