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China awards 4th telecom license to state-owned broadcaster

[HONG KONG] China granted a telecom services license to state-owned China Broadcasting Network Company, the country's Ministry of Industry and Information Technology (MIIT) said on Thursday, creating a fourth player in a market long dominated by three big companies.

The basic telecom services license allows the broadcaster to provide nationwide Internet data and telecommunication services, the MIIT wrote in a short statement on its website, without elaboration.

The move makes China Broadcasting Network (CBN) the country's fourth telecom service operator after China Mobile, China Unicom Hong Kong Ltd and China Telecom.

Analysts, however, see little impact to China's three major telecom operators in the near term due to China's limited growth potential for handset supply and China Broadcasting Network's capital constraints. The three companies' shares closed broadly in line with Hong Kong's stock market on Thursday.

"We do not think CBN will become a major threat to existing telecom operators in the near term, unless CBN can resolve its own financial bottlenecks and complete the process of national television and broadcasting network consolidation," Nomura analyst Leping Huang wrote in a research note.

Mr Huang expects the company to spend 20 billion yuan (S$4.18 billion) in telecoms this year, which is equivalent to 5 per cent of China's total spending in the sector.

Telecom equipment makers in the supply chain such as Huawei Technologies Co Ltd and ZTE Corp would benefit slightly as the new player joins the market, analysts said.

Established in May 2014, one of China Broadcasting Network's missions is to consolidate China's cable TV industry into one network, according to the company's website.