Smaller cellular operator China Unicom has also won a licence to provide mobile telecoms services in Macao.

Wang indicated China Telecom would remain focused on expanding its own overseas operations instead of buying foreign companies as a shortcut.

The fixed-line incumbent has established nine operations in overseas markets including the United States, Europe and Central Asia.

Both China Telecom and China Netcom have been coping with a slowdown in their fixed-line voice businesses. "We need to find new revenue streams," Wang said.

But overseas M&As seem to be too risky for fixed-line carriers which are already coming under increasing competitive pressure from their cellular rivals in China, as most consumers are going wireless.

China Netcom Group Corp (Hong Kong) Ltd in June announced it would sell its stake in the unprofitable Asia Netcom, which consists mostly of assets belonging to AGC.

That marks a setback for China Netcom. Company officials have said the firm is shifting its strategic focus from overseas expansion to domestic business.

China Telecom has been transforming itself from a telecoms service provider to a so-called "comprehensive information service provider" to offer integrated voice and data services to customers since 2004.

Such a strategy has helped China Telecom generate a larger portion of revenue from non-voice services.

In the first half of this year, China Telecom's Hong Kong-listed arm generated 23.2 billion yuan (US$2.9 billion) from non-voice services, accounting for 27.5 per cent of total revenue during the period.

(China Daily 12/12/2006 page10)

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