UPDATE 2-China to issue 3G licences, merge telecoms majors

(Adds analysts' comment, details)

By Vinicy Chan and Edmund Klamann

HONG KONG/SHANGHAI (Reuters) - China will issue three licences for high-speed third-generation mobile phone services and called for a merger of China Unicom (0762.HK> and Netcom (0906.HK: Quote, Profile, Research, Stock Buzz), two of its four biggest telecoms providers, in a long-awaited industry revamp.

The government said on Saturday it would also call on China Telecom (0728.HK: Quote, Profile, Research, Stock Buzz), the country's biggest fixed-line telecoms carrier, to purchase wireless telecoms company Unicom's CDMA network, fleshing out details of the restructuring following an initial announcement on Friday.

ABN AMRO has valued the Unicom network at HK$40 billion ($5.1 billion).

China's 1.3 billion people can now look forward to joining others in advanced economies who already enjoy blazing-fast Internet access, games and a host of multimedia content from maps to music on their cellphones.

The 3G licences and the industry revamp are also set to unleash billions of dollars in spending for network gearmakers such as Ericsson (ERICb.ST: Quote, Profile, Research, Stock Buzz), Motorola (MOT.N: Quote, Profile, Research, Stock Buzz), Nokia (NOK1V.HE: Quote, Profile, Research, Stock Buzz), Nortel (NT.TO: Quote, Profile, Research, Stock Buzz) and Siemens (SIEGn.DE: Quote, Profile, Research, Stock Buzz), as newly merged firms expand to compete.

Although analysts are quick to point out that a full launch of 3G services is years away, allowing three nationwide providers increases choice and promises to hold down user fees.

On a corporate level, it will also help address the perennial complaints of fixed-line firms at being left out of the world's largest and fastest-growing major telecoms market. Analysts say heightened competition would in theory benefit users by also enhancing service and content quality.