Telecoms: The Door Slowly Opening to Foreign Investment

Despite the lack of a regulatory regime governing foreign investment, and prior to its accession to the World Trade Organization (WTO), China appears to have already permitted the entry of several foreign investors into its coveted telecom service sector. While these initial investments stand as important indicators that China seems willing to fulfil its WTO commitments, they do not seem to indicate a rash departure from the planned gradual market liberalization.

Early Birds

In December 2000, AT&T made headlines as the first foreign company to form a telecom joint venture (JV) in the PRC1 by acquiring a 25% shareholding in Shanghai Symphony Telecommunications Co Ltd. The JV, which reportedly received the full support of the State Council and the Ministry of Information Industry (MII), will lease dark fibre from a domestic carrier and implement high-reliability fibre-optic rings with high-speed routers and switches, and provide access fibre directly to customer buildings. With total investment reported to be US$25 million, the JV appears to have shied away from obtaining central Ministry of Foreign Trade and Economic Cooperation (MOFTEC) approval, which is generally required for investments valued above US$30 million.