Chinese billionaires Jack Ma and Zhang Jindong may be issued licenses this month which would allow them to establish phone companies in China, boosting the government's efforts to bring down prices and encourage high-speed networks in the biggest wireless market in the world, Bloomberg reported.
This year, Chinese leaders proposed to allow private firms to utilize the networks of three state-owned carriers which include China Mobile Ltd, China Unicom (Hong Kong) Ltd and China Telecom Corp. The possible gains that getting access to the wireless industry worth $213 billion led Zhang's Suning Commerce Group Co to form an alliance with China Unicom. It also encouraged one of Ma's companies to ask for a license and Gome Electrical Electrical Appliances Holding Ltd to explore leases with state carriers.
The report said Chinese President Xi Jinping has relied on firms in the private sector to take care of the marketing and promotional burden of attracting new users in its quest to encourage consumers to upgrade to faster networks. The move which challenges state carriers may result to price reductions, more service plan options and improved customer service for wireless users.
CIMB Securities Ltd Analyst Bertram Lai told Bloomberg, "The benefits could come on the front end, that is, through better service and an increased range of options for consumers. Consumers may benefit from being able to have their phone service from a more proactive organization that caters specifically to their needs."
Research firm Ovum analyst Nicole McCormick said the new companies will possibly be able to get 10% of mobile phone connections in China by 2018. She said the retailers who sell phones would be able to bundle them with wireless services in order to provide service to the millions of migrant millions who travel the country each year to go to work in the factories and back to their homes.
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