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China Unicom, China's second largest mobile phone operator, denied Tuesday that the split of its marketing network foreshadows a company break-up.

 

Company vice president Yang Xiaowei said the split of its marketing team -- with one team covering the GSM and the other CDMA networks, is a normal strategic adjustment, and denied that the company is the epicenter of a major restructuring of the telecommunications sector.

 

One China Unicom marketing team will run its CDMA Division and another team will independently operate its GSM network, in a move designed to boost efficiency, according to a company videoconference.

 

But some analysts have speculated that it might be a sign of big changes in the industry.

 

Li Guangyong, an analyst with Guangfa Securities, said it was public knowledge the government was keen to reorganize the telecoms market and that a carve-up of China Unicom would optimize the allocation of mobile phone resources and enhance efficiency.

 

Despite its 141 million subscribers, China Unicom appears to be the weak link in the present setup.

 

The company has for a long time languished behind its rival China Mobile, which signed up a record 53 million new subscribers in 2006 alone, analysts said.

 

Some analysts have pictured a new industrial scenario in which China Mobile continues to be the country's largest mobile operator, and China Telecom and China Netcom each acquire one of China Unicom's 2G networks, allowing them to give market leader China Mobile a run for its money.

 

A recent report from leading investment bank JP Morgan Chase also discussed the possibility of a reorganization.

 

The surge in the price of China Unicom shares on the Shanghai exchange prior to Wednesday has fueled speculation about a company break-up.

 

Analysts said that the reorganization was logical as the government would probably only issue three 3G technology licenses.

 

China Unicom signed up 930,000 new subscribers to its GSM network last year, bringing the total to 105 million. Subscribers to its high quality, low-radiation CDMA network number 36 million.

 

(Xinhua News Agency February 1, 2007)