In late June, the Chinese telecoms ministry, the MIIT, issued an “implementation opinion” outlining an updated view on private investment in the telecoms industry. Given that private investment opportunities in the sector have been very limited at…
In late June, the Chinese telecoms ministry, the MIIT, issued an “implementation opinion” outlining an updated view on private investment in the telecoms industry. Given that private investment opportunities in the sector have been very limited at best in the past, the notice sounds encouraging, despite its lack of detail in some areas.
The document lists a number of telecoms subsectors in which private investments will now be allowed, including managed network services and management of network infrastructure, resale, network access services and ISPs.
Many details are not clear from the paper, and it remains to be seen what the notice will mean in reality.
Michelle Chan, head of Herbert Smith’s TMT practice in Asia, notes that “resale” could refer to the sale of SIM cards only, or to the operation of whole MVNOs.
She also clarifies that investments in network access services by domestic private investors will be allowed on a trial basis. This will be limited to smaller networks, and might include the last mile, or possibly wireless city networks. But the investment opportunity does not extend to operations on a national scale.
Chan highlights that the paper talks about outsourcing towers – an approach that would be new in the People ’s Republic, and that is, according to Chan, “groundbreaking”.
With regards to basic telecoms businesses, private investors will not be allowed to own 100% of companies. But the implementation paper points out that strategic investors will be allowed. Limitations of investment levels do not apply to value added telecoms services.
Are foreign investors welcome?
But from an outside perspective the most important question will be if the implementation opinion extends to foreign investors, or if it is limited to Chinese nationals.
The document does not specifically address this, and only speaks about “private capital” and “private investment” in general terms, where more specific descriptions could be expected if the MIIT clearly also wanted to encourage foreign investors.
Chan remains optimistic but says there is uncertainty as to whether foreign investors would be allowed to participate in these new opportunities. At the very least, the notice will allow more domestic investors to get a telecoms licence. And those could then go out and speak to foreign investors to attract their investments.
