January 16, 2017 / 5:51 AM / in 3 years

China, eager for telecoms reform, calls for private investment

BEIJING (Reuters) - The Chinese government has renewed calls for private investment in the country’s telecommunication firms as it encourages them to cut fees and other costs and become more competitive in offering internet-related services.

The country’s big telecoms firms, China Telecom Corp Ltd, China Unicom Hong Kong Ltd and China Mobile Ltd, are all units of unwieldy state-owned enterprises. Those parent firms are seen as heavily overstaffed, inefficient and slow to develop key technologies.

The government will open the telecommunications industry to private investment and give “free rein to telecommunications companies in the development of the internet,” according to a notice issued by the CPC Central Committee and the State Council.

The notice, the latest in a string of increasingly proactive directives, urged further cuts to telecoms fees and said the government was committed to bolstering competition in the sector by easing rules and reining in subsidies.

It also pledged to give venture capital firms and small internet businesses a freer rein.

Concerned by the need to build high-speed networks in poverty-stricken and remote areas and lower bandwidth costs, China’s leadership has been gradually opening core technology requirements to private firms which have shot ahead in developing cloud and big data services as well as mobile software.

China Unicom has recently forged a series of partnerships with the country’s top tech firms including Baidu Inc and Alibaba Group Holding Ltd.

Telecommunications is not the only industry being encouraged to adopt what the government calls “mixed-ownership” structures. In guidelines issued in 2015, the central government said it would seek to overhaul corporate governance in underperforming SOEs.

In September, China launched a $52.5 billion fund to restructure lumbering SOEs. China Mobile is one of 10 firms investing in the fund.

Most recently, Chinese state-owned arms manufacturer, China North Industries Group (Norinco) said on Jan. 5 it would consider a mixed ownership structure and work to amend its management structure.

Reporting by Cate Cadell; Editing by Edwina Gibbs

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