The three largest telcos will spin off part of their business into a jointly owned tower firm to coordinate tower facilities construction in China.
The new firm is developed by the three largest telcos – China Mobile, China Telecom and China Telecom – to further improve the level of joint construction and sharing of telecom infrastructure, Ministry of Industry and Information Technology (MIIT), confirmed the rumor on its website on Wednesday.
The jointly-owned firm will be "responsible for coordinating the construction of communication tower facilities" in China, MIIT noted on the website, without providing further information.
According to a follow-up Tencent news report on Friday, the new firm which is likely to be named as "National Tower Company", will become giant in size as its registered capital will reach 10 billion yuan (US$1.6 billion), and it will positioned on the "same level" with the three parent operators.
It will carry out tower, site and pipeline constructions and maintenances for the three Chinese operators, and collect rent from them in accordance with the lease contracts.
The move comes after Chinese telecom operators have been chasing to invest in 4G network developments when the country approved the first batch of licenses in late 2013.
The approach is likely to resolve pipes and towers sharing issues by eliminating unnecessary repetitious infrastructural developments among the three state-owned operators.
Information from equipment manufacturers showed China Mobile planned to build 500,000 4G base stations by the end of this year while target of the smaller China Telecom could also reach 250,000.
Total 4G base stations in the country will reach 1 million by the end of this year, up from 300,000 today.
The Tencent report said mindset behind the plan is to reduce costs for all the three Chinese telecom operators during the 4G network constructions in China.
The report quoted an unnamed official from MIIT, who believes Chinese consumers will also benefit from the plan by paying less for the services as costs among operators will decrease.