Saturday, November 28, 2015   

Charges blow for telco giant

Gary Chau

Friday, October 04, 2013


Shares of China Unicom (0762) and China Telecom (0728) soared while China Mobile (0941) fell on news that the mainland authorities are considering revising call settlement charges.

Settlement charges are the cost of calls paid among telcos, and are paid from the caller side to the receiver side. The charge stands at six fen (7.6 HK cents) per minute.

A source told website ENNweekly, owned by Xinhua News Agency, that the settlement charges from China Unicom and China Telecom to China Mobile will be reduced to as low as three fen per minute.

However, the settlement charge for calls from China Mobile to the two telecom companies will remain unchanged at six fen, it was reported.

The market has estimated a 10 percent drop in China Mobile's revenue, or 12 billion yuan, on the possible move.

However, China Mobile may be allowed to enter the broadband market, according to the report.

ENNweekly said it had a report from the Ministry of Industry and Information Technology saying the charges would address the telecom industry's imbalance.

Some see the move as the country's largest mobile player giving in so as to obtain a fourth- generation license as soon as possible. It was rumored the license for the homegrown TD-LTE would be granted around National Day. China Telecom, the smallest of the three, will rent from China Mobile.

China Mobile has already started the presale of a 4G plan in Guangzhou and Shenzhen.

The 4G anticipation drove China Mobile shares to as high as HK$88.10, but they closed at HK$86.50 on the charges report. China Unicom jumped 8.4 percent to HK$13.12 and China Telecom gained 7.57 percent to HK$4.12.

Bank of America Merrill Lynch estimates China Mobile's profit will fall 11 percent, while that of China Unicom and China Telecom will grow by 12 percent and 18 percent, respectively.

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