China Grants License to Cable Company to Provide Broadband

China gave approval for a state-owned cable company to provide broadband Internet services, paving the way for the firm to jump into a market dominated by the nation’s three mobile-phone carriers.

The Ministry of Industry and Information Technology issued a general telecommunications license -- including the ability to provide Internet data transmissions -- to China Broadcasting Network on May 5, according to a statement on the ministry’s website.

The license paves the way for the company to jump into an industry that Sanford C. Bernstein estimates will expand about 5 percent annually into a 240 billion yuan ($37 billion) market by 2025. China’s three wireless carriers -- China Mobile Ltd., China Unicom (Hong Kong) Ltd. and China Telecom Corp. -- currently control more than 90 percent of the nation’s fixed broadband market, according to Bernstein.

"This will intensify competition in China’s broadband industry, where China Telecom and Unicom dominate," said Michelle Ma, a telecom analyst at Bloomberg Intelligence in Hong Kong. "Still, it may take years for cable companies to build and ramp up broadband services."

China Mobile shares, which were trading up before the announcement, reversed those gains and slipped 0.2 percent to close at HK$87.90 in Hong Kong. Unicom and Telecom shares fell 0.6 percent and 0.8 percent, respectively. A couple of weeks ago, shares of the carriers fell on reports that the ministry would grant a license to the cable company.

— With assistance by Lulu Shen

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