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MIIT Releases Guidelines on Mobile Communications Resale Business Wholesale Prices

China’s Ministry of Industry and Information Technology (MIIT) has recently released the Guidelines on Mobile Communications Resale Business Wholesale Price Adjustment. Liberalisation of the mobile communications resale business to private capital is also in the pipeline in 2016. Industry players reckon that the business of mobile virtual network operators (MVNOs) becoming licensed after the pilot will usher in a period of high valuation as a result of a series of positive impetus to further improve the ecological environment of the mobile communications resale business.

For a long time, the situation of having high wholesale price has been a hindrance to the development of MVNOs, who buy at wholesale price higher than retail prices they sell. This means that the MVNOs are doing loss-making business.

In response to this situation, MIIT proposed in the Guidelines to ensure wholesale price for mobile communications resale business lower than the average operational unit price (or package price) for similar business of the basic telecoms service providers, to link the two prices together for price adjustment and to establish a mechanism for wholesale price negotiations between basic mobile telecoms services providers and resale operators.

Some MVNOs reckoned that all the network resources in the resale market were owned by the basic telecoms service providers who could dominate the negotiation process, leaving no bargaining power to the MVNOs. The Guidelines provided a fillip to the mobile resale business in this regard.

The Guidelines fully reflect the great expectations of the relevant departments on private capital, bearing the hope that they will promote orderly competition in the mobile communications market through innovation and vitality of private capital and create a market structure of mutual development using the complementary advantages, with the aim of building faster and more affordable networks.

China will open up the mobile communications resale market to private capital in 2016 based on a predefined roadmap.

Meanwhile, the completion of the two-year domestic mobile communications resale pilots at the end of 2015 will kick off the official licensing of the MVNOs. The pilot started on 26 December 2013 with the first batch of enterprises joining the scheme.

For the content of the Guidelines in Chinese, please refer to: 

http://www.fdi.gov.cn/1800000121_23_72778_0_7.html

Content provided by Picture: HKTDC Research
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