Shares of China Netcom Group Corp (Hong
Kong) Ltd, the smaller of the nation's two fixed-line telephone operators,
fell as much as 7 percent on a report the company may scale back its businesses
in Shanghai and Guangdong
.
The stock fell 4.9 percent to HK$19.82 as of 3:10 pm yesterday
in Hong Kong. China Netcom may sell assets in Guangdong and Shanghai back to its
parent, which currently owns most of Netcom's southern China business, the South
China Morning Post said on Saturday, citing an unidentified industry
official.
A withdrawal by Netcom would underscore its failure to loosen
China Telecom's dominance in the southern regions of the country.
In
Shanghai and Guangdong, which have about 47 million fixed-line users, China
Telecom has an estimated 95 percent market share, according to estimates by
Credit Suisse Group analyst Jeffrey Tan.
"China Netcom may sell the southern assets back to its
parent and focus on the north, as it's encountering difficulties breaking China
Telecom's monopoly
in the south," said Marvin Lo, an
analyst at BNP Paribas SA in Hong Kong who rates China Netcom stock
"neutral."
China Netcom is examining ways to
restructure the company's operations, Xu Song, a China Netcom spokeswoman in Beijing
, said yesterday,
declining to specify a timetable.
China Netcom provides phone and
Internet services in 10 northern regions, including Beijing and Tianjin and provinces such as Hebei, Henan, Shandong and Liaoning
.
Parent China
Network Communications Group was formed when the government broke up the former
telecom monopoly in 2002. The group was given networks in the northern
provinces, while China Telecom, which controls Hong Kong-listed China Telecom
Corp, received assets in the southern and western provinces.
As of the
end of September, China Netcom had 119.5 million fixed-line users, 30 million of
whom were subscribers to a citywide wireless service called Little Smart, which
competes with the nation's mobile phone duopoly, China Mobile (Hong Kong) Ltd
and China Unicom Ltd. China Netcom had 14.3 million broadband users at the end
of September.
China Telecom had
221.1 million users at the end of Octo
ber. The shares fell 1.8 percent to HK$3.91 in Hong Kong.
Separately,
China Netcom's Xu said the company has no immediate plans to sell
yuan-denominated shares on the mainland.
China Mobile, China Netcom and
China Telecom, which are listed in Hong Kong, plan to sell shares on the
mainland to raise as much as 100 billion yuan to build high-speed wireless
networks, the Xinhua News Agency reported late on Saturday.
(For more biz stories, please visit Industry Updates)