Telecom sector set to open up

Foreign companies will be allowed to operate virtual networks in China, according to a draft rule announced on Wednesday, as the country steps up its push to inject new vitality into the multibillion-dollar telecom industry currently dominated by three State-owned enterprises.

The Ministry of Industry and Information Technology said in a statement on its official website that foreign companies, private enterprises and State-owned companies will all be able to apply to run such networks－telecom services that piggyback on the infrastructure of China's big three carriers: China Mobile, China Unicom and China Telecom.

"China will officially launch virtual network services, and we welcome foreign companies to join the industry," the ministry said, adding there is no limit on the number of applicants.

The draft rule, which will seek public feedback over the course of 30 days, comes after the country has piloted virtual network services for three years.

China now boasts more than 60 million virtual network service subscribers, accounting for 4.1 percent of the country's total mobile users, data from the ministry showed.

The industry has already attracted direct private investments worth 3.2 billion yuan ($500 million), and has helped to create nearly 60,000 jobs.

Xiang Ligang, CEO of telecoms industry website Cctime, said: "The rule marks a big step to allow foreign companies to access China's huge telecom market, but the competition is mounting.

"Reselling telecom services delivers low profits, but it is an important way to accumulate users, and that is why so many companies are considering establishing a presence here."

High-tech heavyweights such as Alibaba Group Holding Ltd, Tencent Holdings Ltd and Xiaomi Corp are among the 42 companies that are currently running trial virtual network services.

Among them, 13 were profitable in 2017, with three companies seeing their user base exceed 5 million.

Xu Lidong, a senior researcher at the China Academy of Information and Communications Technology, a government think tank affiliated with the ministry, said, "Compared with virtual network operators in foreign countries, which did not achieve profits until three to five years later, Chinese companies have already done quite well, by generating profits within just three years."

An affiliate of Hainan Airlines said it has achieved profitability within 19 months of launching such services.