China Tietong to be officially launched in Aug.
By Chen Zhiming (China Daily)
Updated: 2004-07-23 08:57

China Tietong Group Co Ltd (CTT) is scheduled to be officially inaugurated early next month in order to consolidate its business and seek further expansion in the nation's telecom market.

The launch ceremony for the new firm, formerly China Railcom Group Co Ltd (CRC), had initially been set for July 26.

But China Tietong spokesman Guo Xiaozhao told China Daily yesterday: "We have not set the exact date for the inauguration, but it will take place early next month."

The company entered a new era on Tuesday by changing its name from China Railcom to China Tietong and adopting a new logo throughout the country.

He added that all preparatory work for the launch of the new company had been completed.

Industry experts are confident the company's new start will give it the necessary impetus to develop its business in a fierce market.

China Tietong attracted the attention of the industry in January when it separated from the Ministry of Railways.

This marked the start of China Tietong's operations as an independent fundamental telecom operator in the domestic market under the regulation of the State-owned Assets Supervision and Administration Commission.

The separation enables China Tietong to compete directly with the nation's five other major telecom operators - China Telecom, China Netcom, China Mobile, China Unicom and China Satcom.

This also means that the ministry will exempt China Tietong from a total of 2.38 billion yuan (US$286 million) debt, according to the State Council's statement.

Loans from the World Bank and Swiss Bank which were used to build up China Tietong's networks will also be returned by MOR.

"Those privileges have laid a solid foundation for China Tietong's further development," said Chen Jinqiao, director of the China Academy of Telecommunications Research under the Ministry of Information Industry.

According to China Tietong, it has registered a sound development over the past three years with the revenue of its fixed-line business notching up a 37 per cent year-on-year growth.

It is likely to sign up 11 million fixed-line telephone subscribers by the end of this year.

The firm's revenue is likely to surpass the 10 billion yuan (US$12 billion) mark this year.

But the latest government figures indicated that China Tietong accounted for only about 1.5 per cent of the total market share, a tiny figure compared to China Telecom's 31.1 per cent and China Netcom's 16.1 per cent.

"Internal integration and resource readjustment is crucial for China Tietong to become truly competitive," said Chen.

Established on December 20, 2000, Railcom has a registered capital of 10.3 billion yuan (US$1.2 billion).

By the end of last year, it had total assets of 42.4 billion yuan (US$5.1 billion) and a 70,000-strong workforce.

Its main fields of operation are currently in fixed telecommunications networks such as fixed-line telephones, domestic and international long distance calls, IP phones, data transmission, the Internet and other value-added telecom services.

"Despite the new name and new image, China Tietong is confronted with great challenges in the harsh market competition brought about by an increasingly open market," said Zeng Jianqiu, a professor at Beijing University of Post and Telecommunications.

"Malpractices such as price wars and problems concerning interoperablity between telecom operators will put great pressure on China Tietong," he added.

He held that China Tietong should still take advantage of its railway networks and work out a practical strategies while competing with China Telecom and China Netcom.

Another means of expansion could be through seeking co-operation with other major telecom operators, he suggested.

China Tietong is aiming to become a strong telecom operator in the coming three to five years.

To realize its target, company sources said that it is going to invest up to 9 billion yuan (US$1.08 billion) and raise 3 billion yuan (US$360 million) to upgrade its infrastructure this year.

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