In an interesting move to break the dominance of China Mobile Ltd in the market, China Unicom Ltd and China Telecom Corp. Ltd has joined hands together. The duo established a partnership to share their resources for various strategic initiatives. Currently, China Mobile enjoys 63% of the total market share. China Telecom and China Unicom together hold only 36% of the share.
The deal focuses on network sharing of rural 4G infrastructure. Sharing of resources to establish necessary infrastructure is expected to provide a 40% savings in capital expenditure. The operational costs would also be reduced, making way for higher ROI in the long term.
China Unicom Ltd and China Telecom Corp. Ltd. will also promote a ‘six-mode’ smartphone standard that will support different technologies. This will enable the smartphone developers to develop a single version of a product for all of China’s operators instead of catering to specific requirements.
Developing new ventures for introducing new services and improving customer experience are also the components of the deal.
Revenue sharing between the companies, pricing of products, regulator’s support for a full-fledged merger between the two are the factors that are yet to be seen.