According to the telecom industry on Sunday, the Chinese government, ahead of the expected restructuring, recently decided to merge fixed and mobile service providers. Accordingly, China Telecom, the country's largest fixed service provider, will take over China Unicom's CDMA network.

China Unicom's European-style GSM network will be merged with China Netcom, the country's second-largest fixed service provider. China Mobile, the top wireless operator, will take over China Railcom, a small fixed service provider.

The restructuring is a strategy to prepare for third- and fourth-generation mobile service projects, by making the country's telecoms providers bigger in line with the global trend of merging fixed and mobile service providers.

But the process confuses things for SK Telecom, which holds a 6.61 percent stake in China Unicom after an investment of $1 billion. SK Telecom had planned to expand its CDMA business in China through China Unicom, making the most of the CDMA technology it has built up in Korea. SK Telecom also hoped to win a 3G CDMA-based mobile service business license in China by 2009.

With the plan to sell China Unicom's CDMA network to China Telecom, SK Telecom's prospects for China are muddied. And if China Unicom's GSM network is merged with China Netcom, SK Telecom's share of China Unicom will have to be readjusted. Lee Dong-seop, an analyst at Daishin Securities, said, "If China Unicom sells its CDMA network, then the value of the company will be lowered and so will the value of SK Telecom's stake."

SK Telecom said, "We don't think that the Chinese government will cause excessive disadvantage to a foreign company that has invested in a Chinese telecoms firm. We'll continue to invest in third- and fourth-generation telecoms projects in China."

(englishnews@chosun.com )