China Unicom merges with China Netcom

China Unicom and China Netcom were merged into a new mobile telecommunications giant on Wednesday, a major step towards restructuring China's telecom industry. The merger comes as the country prepares to deploy 3G high-speed wireless service nationwide.

The reshuffle means that the new China Unicom can extend its market from mobile to fixed-line and broadband service after mergi

ng with China Netcom, the countries' second largest fixed-line operator. Its CDMA mobile network has been sold to China Telecom.

Structural imbalance has hindered the development of China's telecom industry in the past. Service provider China Mobile has dominated the mobile market, with profits more than double that of its three competitors combined.

The plan to reshuffle the industry started in May, reducing five state-owned telecom operators into three new giants each with a full range of services.

Reformers hope the restructuring will boost competition and optimize resources. It also paves the way for the development of a 3G high-speed wireless service in China, which will issue three licenses to domestic operators.

The home-grown TD-SCDMA standard has been recognized as one of the three official 3G standards, but the country promises equal status to the other two official standards.