China mulls private telecom investment

China’s MIIT has reportedly drawn up a plan that would for the first time allow private investment in basic telecom infrastructure.

However, it almost certainly won’t mean open sesame for privately-held telcos, and especially not foreign operators. Rather, the scheme  looks to be another way of raising cash for network rollouts while ensuring state-owned telcos retain control.

The ministry has proposed allowing carriers, cable operators and private firms to combine as “local network construction companies” to build out networks, the Southern Metropolis Daily reported Wednesday (posted here on Sina). 

The telco or cable operator partner will take a 51% share of each of these local telcos, and private firms 49%.

The report makes no mention of whether these new local operators would be eligible for licences. However, the scheme as reported parallels the current arrangements for foreign telcos in China, in which they can partner (or in rare cases form a JV) with one of the three Chinese operators for certain enterprise or VAS.

The proposal requires the approval of State Council (China’s cabinet). Xiang Ligang, CEO of tech consultancy and news service CCTime, is quoted as saying the likelihood of the plan going ahead is “very high” because of its ability to bring fresh investment into the sector.