China may allow private firms to offer mobile services

HONG KONG (Reuters) - China is considering a trial to allow private firms to offer mobile services by acquiring bandwidth from major carriers, in a step aimed at introducing competition to the country's state-owned telecom industry.

China's Ministry of Industry and Information Technology said in a statement it will solicit public opinion until February 6 on the plan, which would be a key step in liberalizing the world's largest mobile phone market, with more than a billion subscribers.

The Chinese mobile market has three telecom carriers, China Mobile Ltd, China Unicom (Hong Kong) Ltd and China Telecom Corp Ltd, but only about a fifth of subscribers are 3G users and the rest are low-end 2G users.

Under the proposed two-year trial, private firms could buy bandwidth and offer rebranded services directly to consumers.

The ministry said the move would allow healthy competition and improve services.

China's State Council said in 2010 that it would encourage private investment in the telecom industry and promote competition.

Foreign investment is still limited to minority holdings in listed telecom firms, and foreign companies would not be allowed to take part in the trial, the ministry said.

China pledged to gradually open the telecom sector to foreign investors after it entered the World Trade Organization in 2001, although most foreign participants now are telecom equipment makers, such as Alcatel-Lucent SA.

(Reporting by Lee Chyen Yee; Editing by Richard Pullin)