Telephone firm China Netcom, which is restructuring prior to an eventual listing, has already started generating revenues in the southern stronghold of its larger rival China Telecom, a senior executive said.

Both companies were created in May 2002 when China's former fixed-line phone monopoly was split. Since then, China Network Communications Group Corp has been trying to integrate its diverse assets to compete with China Telecom Corp.

China Netcom has more networks in the northern part of China, while China Telecom, parent of listed subsidiary China Telecom Corp, has more networks in the lucrative southern provinces.

Both are State-owned firms set up by the government to introduce competition to the rapidly growing sector. China had 250.47 million fixed-line subscribers by the end of September, according to official figures.

"China Telecom is now attacking north from south and China Netcom now is attacking south from north. In that sense, I'm very confident to say that we are ahead of China Telecom," said Fan Xingcha, vice-president of CNC International Corp Ltd, speaking to a business group.

"China Netcom Group (has) already had business in China Telecom's southern territory," he said. "And in fact as of today, the revenue we already generated from the southern 21 provinces is close to three billion renminbi (US$362.5 million)."

He did not give a timeframe for the figure.

CNC International is the newly-launched overseas division of China Netcom Group, which Fan said had 77 million users, revenues of US$8.1 billion and total assets of US$26.6 billion at the end of 2002.

Fan declined to comment on China Netcom's listing schedule, but said it was keen to compete in China's mobile phone market, the largest in the world by number of users.

"Certainly we would like to have a mobile licence and we see this will present us with a new growth opportunity, but I cannot tell you when and what kind of licence we can get," he said.

China Netcom has spent more than a year integrating its networks, which include fixed-line networks in 10 northern Chinese provinces and assets of telecoms service providers Netcom Ltd and Jitong Network Communications.

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