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Unicom insists a split is not on the cards

China Unicom has denied recent speculation that it could be split up and sold to fixed-line giants China Telecom and China Netcom.

The conjecture is being fueled by Unicom’s moves to separate its GSM and CDMA arms into two divisions.

“The company appears to have two engineering teams for its GSM and CDMA networks and separate stores for GSM and CDMA,” one analyst explains. “[But] Unicom still insists that it will not sell either of their networks. It explains that it is splitting up their GSM and CDMA operations to enhance competitiveness.”

The separation of operations will also make it easier for Unicom to find strategic investors for each of the businesses, says the analyst.

Adding to the break-up rumors are comments from Zuo Xungshen, chief executive of Hong Kong-listed China Netcom, that his firm was interested in merging with Unicom’s GSM arm. A probable deal could see the outfit issue new shares to Unicom.

But Unicom, which is chasing two 3G licenses for each of its respective technologies, foresees no such play.

“Unicom hopes to obtain one WCDMA and one CDMA2000 license [for 3G],” says the analyst, although she does not anticipate Unicom actually launching two 3G networks.

“We still think that industry restructuring, including the split-up of Unicom, will be delayed,” she says. “If Unicom really gets one WCDMA license and one CDMA2000 license, it could be eventually split, given the large investment in two networks.”

Some speculate that Unicom/Netcom will roll out CDMA2000 and CT will launch WCDMA or TD-SCDMA. And now there are reports that China Mobile will introduce homegrown Chinese-air-interface TD-SCDMA, but analysts are not ruling out the possibility that CM will also pursue WCDMA.

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