China's telecom stocks fall after sector shake-up

HONG KONG, June 3 (Reuters) - Chinese telecom stocks fell on Tuesday a day after details of two mega-deals in the industry were revealed, with analysts saying the firm's shares had already risen in the lead-up to the deals.

Wireless operator China Unicom (0762.HK) was set to open 4.55 percent lower at HK$17.64 while fixed-line operator China Telecom (0728.HK) was set to open down 5.6 percent at HK$5.35.

China Telecom's smaller rival, China Netcom 0906.HK had fallen nearly 3.9 percent at HK$26.00

All three stocks have been suspended since May 23. China Unicom said on Monday it was paying $24 billion to take over fixed line peer China Netcom and unload its underperforming network to China Telecom for over $15 billion.

Morgan Stanley downgraded Unicom to equal-weight from overweight after the sale of its CDMA business.

"We believe the transaction prices are in line with market expectations," Morgan Stanley said in a report. "With the restructuring details now formally out and a major surprise to the market, we believe it is time for investors to take profits."

(Reporting by Joseph Chaney; Editing by Anne Marie Roantree)