Door ajar for private telecoms investment

Privately-owned Chinese telecom firms and investors will be allowed to invest directly in basic telecom operators and networks, a Chinese government paper has confirmed.

But the move appears more symbolic than substantive. The Ministry for Industry and the Information Industries (MIIT) does not stipulate how big a stake investors can take or when and how the new regulations will be introduced.

The MIIT paper, posted on its website yesterday, set out eight areas in which private investment would be “encouraged and guided”. Most of those areas, such as data centres, VAS and web hosting, area already open to private players.

It said private firms would be encouraged “to enter the basic telecom operator market as a shareholder [either] through the government lowering its stake in listed telecom companies or in an increase in capital.”

Private companies would also be allowed to run pilots of “mobile communications resale” and “access network services,” the ministry said, without elaborating on either.

The paper, dubbed an “opinion”, was a response to a call from the State Council two years ago for more private investment in telecoms.

The news offers no comfort for foreign telcos, who have been effectively blocked from even China’s telecom service market, despite its WTO commitment to open it to foreigners.

Theoretically, the new measures could leave them even worse off, as the ministry also promises to entice private investors to pursue opportunities in telecom markets abroad.

Yet if that is a geniune commitment it would surely nullify the rest of the scheme, which is about drumming up investment at home. Or it may just be a pointer that this belated and vague announcement is just a hollow promise.