China lowers barriers but freezes ratios for foreign telecoms operators
Source: China Law & practice
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The Chinese government has provided more incentives for foreign-invested telecommunications enterprises (FITEs) to do business in the PRC, through the revision of the Provisions for the Administration of Foreign-invested Telecommunications Enterprises.
The revised regulations have reduced the minimum registered capital requirements for a FITE. For an enterprise that intends to provide basic telecommunications services nationwide or across provinces, the requirement is down from Rmb2 billion (US$292.2 million) to Rmb1 billion. For those that focus on a single province, the requirement is now reduced from Rmb200 million to Rmb100 million.
Damien Bailey, information communications and technology partner at Simmons & Simmons, said that the lowering of the barriers will make foreign investment in the Chinese telecommunications sector more attractive.
“It is likely that we will see major foreign telecommunications operators taking minority stakes in the three large Chinese telecommunications operators,†he said.
Despite the revisions, the maximum proportion of foreign investment is unchanged. If foreign operators are unable to exercise control of the FITE, Bailey said, this could hamper their investment interest in the sector, making them reluctant to take large stakes in domestic operators.
The new provisions were promulgated on September 10 2008 and took effect on that date.
