Bloomberg News

China Telecom, Unicom Pledge Upgrades in Bid to End Probe

December 10, 2011

Dec. 2 (Bloomberg) -- China Telecom Corp. and China Unicom (Hong Kong) Ltd. pledged to upgrade their networks and cut the price of some services in an appeal for the competition regulator to end an antitrust investigation.

China Telecom “has submitted to the relevant regulatory authorities a proposal for enhancement initiatives and application for suspension of investigation,” the company said in a filing to the Hong Kong stock exchange today. Some interconnection arrangements between the company and other carriers didn’t “fully meet the quality requirements of relevant governing authorities,” it said.

The National Development and Reform Commission started an investigation of China Telecom, based in Beijing, and Unicom over Internet interconnection fees, the companies said last month. The probe may have resulted in “billions of yuan” of fines, according to a Nov. 9 report by state-run China Central Television that cited Li Qing, deputy director general of the commission’s department of pricing supervision.

Unicom “identified room for improvement in pricing management,” it said in a separate Hong Kong exchange filing. The carrier plans to reduce fees for some customers, the Beijing-based company said.

Price Cuts

China Telecom will work with other carriers including Unicom to expand some networks, it said. China Telecom will cut interconnection fees for China Mobile Communications Corp.’s Tietong unit, and may lower prices of some Internet services by about 35 percent over five years, according to the statement.

The commission received a request from China Telecom and Unicom to end its probe, the official Xinhua News Agency reported today, citing the regulator.

China Telecom fell 1.5 percent to HK$4.62 at the close in Hong Kong, before the exchange filing. Unicom declined 0.8 percent to HK$16.58. The city’s benchmark Hang Seng Index rose 0.2 percent.

China United Network Communications Corp., Unicom’s broadband unit, is giving the commission details on pricing, volume and sales for its bandwidth-leasing business last year, the parent company said on Nov. 9.

China Telecom’s services are “strictly in accordance with the relevant laws and regulations,” it said on Nov. 10.

--Editors: Subramaniam Sharma, Tom Lavell

To contact the reporter on this story: Mark Lee in Hong Kong at

To contact the editor responsible for this story: Michael Tighe at

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