According to a report from Bloomberg News, the government is considering a merger of China Unicom and China Telecom to speed up development and deployment of a 5G network. And that's before you take into account the ongoing talk of a trade war between the United States and China. (China Unicom), two of China's largest mobile-phone carriers, will be merged into one mega-carrier to lead China towards dominating the world with its 5G technology.
Asia, according to telecom industry body GSMA, will be the largest 5G market in 2025 - driven by China, Korea, Japan and Australia.
The country's top leaders are reviewing a proposal to combine China United Network Communications Group Co (China Unicom) and China Telecommunications Corp, Bloomberg reported, adding that no decision has been made and it's also possible that a merger may not happen.
At stake is the ability to shape and control 5G, the high-speed wireless technology billed as the key to revolutionising how we use everything from home appliances to cars.
China Unicom and China Telecom shares jumped on Tuesday after reports of the merger.
But the suggestion that China would consider such a move serves to show how the race to 5G is as much about politics as it is technology.
China's main stock indexes fell over 1 percent on Wednesday, as investors dumped banking, property and resources shares amid fresh signs of anaemic growth, and ahead of a likely escalation of the Sino-U.S. trade war. That's still a third less than the over 900 million at China Mobile. US's temporary export ban on ZTE, which almost crippled the company because of its reliance on American technology, helped give China reason to make 5G development a higher priority. China holds a narrow lead over the US and South Korea in 5G readiness, thanks to proactive government policies and industry momentum, according to research firm Analysys Mason.
A merger would create the world's second-largest mobile operator, with almost 600 million customers.
Huawei has also been effectively frozen out of the United States market on national security grounds, while Australia has banned its telcos from procuring kit from the company. It may also raise concerns at recently listed China Tower, whose business model makes the company benefit from more carriers, not fewer.