China explores merging China Unicom, China Telecom

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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. The state-owned Assets Supervision and Administration Commission, which oversees China's state-owned enterprises, and the Ministry of Industry and Information Technology didn't reply to queries.

The Chinese government is reportedly considering a merger of two state-run mobile operators in a bid to ensure the country assumes leadership in 5G networks. Bernstein analyst Chris Lane notes similar mergers have resulted in 30 percent workforce reductions elsewhere; in China Unicom and China Telecom's case, that's roughly 160,000 people - a move that will be politically unpalatable for Beijing. The current argument for a merger between the two is based on the ability of a combined company to more easily make the huge investments required to build out a 5G network.

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Growth in China's services sector weakened again in August as new business picked up only slightly from July's more than two-year low, a private survey showed on Wednesday.

CT and China Unicom account for 19 percent and 20 percent, respectively, of the 1.49 billion mobile phone users in China. 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. Thanks to government policy, China is slightly ahead of developed nations like US, South Korea, and Japan in 5G. While the company has resolved the issue, Huawei is also unable to sell telecoms equipment in the United States due to security concerns, and Australia has banned both countries from tendering for 5G contracts.

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Visitors gather near a 5G stand of China Unicom during the Mobile World Congress (MWC) in Shanghai, China June 27, 2018.

In its opposition of the Broadcom-Qualcomm deal, the USA argued that the acquisition would likely cut Qualcomm's spending on research and development, indirectly giving Huawei a greater advantage in the race to develop 5G wireless standards and equipment. China Tower shares fell by a record 6.8 per cent on Tuesday.

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