China Telecom Leads Fixed-Lines

We reiterate our Hold rating for China Telecom (CHA), the largest fixed-line service provider in China. The company entered the Chinese mobile telephony market through the acquisition of CDMA business and network assets from China Unicom (CHU) for RMB 110 billion (US$16 billion).

The company remains the market leader in fixed-line phone service and is well positioned to benefit from the rapidly growing Chinese wireless market. In our opinion, CHA's attractive long-term opportunities arise from its dominant position in broadband, the emerging need for wireless and business from value-added services.

However, adaptability of CDMA wireless service, in the presence of other deployed solutions, including GSM, remains a significant challenge. Additionally, competition has intensified as a result of the recently completed restructuring of the Chinese telecom sector and allotment of 3G licenses.

Read the full analyst report on CHA

Read the full analyst report on CHU