Zuo Xunsheng, Netcom's chief executive, also told Reuters in an interview that its state parent had no plans to raise its stake in Hong Kong's dominant fixed line carrier, PCCW Ltd.

In 2002, China split its lone fixed-line carrier along north-south lines. Now, industry executive and analysts say Beijing is close to pushing another industry overhaul to make the sector leaner as it adopts 3G.

"We're not in merger talks with Unicom. It's all market speculation," he told Reuters on the sidelines of the ITU Telecom World 2006.

"We're confident in getting a mobile licence -- it won't be far off but I don't know the exact time or what standard we'd be getting," said Zuo, who is also deputy general manager of listed Netcom's state-run parent.

Talk of industry restructuring has persisted for years and run the gamut from rumours that Netcom would combine forces with Unicom, to speculation that Unicom would be split and hived off to fixed-line rivals -- sporadic hints of which have moved the carriers' stock in the past year.

But on Dec 4, China's top telecoms official told industry executives that he was not aware of a major restructuring of the country's telecommunications industry -- the world's largest after the United States.

Netcom shares were up more than 4% in early afternoon trade, outperforming a 1.2% gain in the index of Hong Kong-listed Chinese firms. Unicom was up 3.2%.

Separately, Netcom has no plans to touch its one-fifth stake in PCCW despite local media speculation it wished to take control of the Hong Kong firm.

"The parent has no plans to increase that stake. We're comfortable being the second-largest shareholder.

What Netcom is now eyeing is a third-generation licence -- same as its larger fixed-line rival China Telecom.

Fixed-line operators are losing business as more people go wireless. Netcom and bigger rival China Telecom are looking to non-voice services such as broadband Internet and Internet television to drive growth.

Analysts say Beijing may unveil the results of trials on a homegrown 3G standard known as TD-SCDMA -- due for completion in June but delayed until October -- in coming months, with 3G licences possibly following in early 2007.

Industry players have been hoping for three years that China would give the green light for high-speed 3G mobile networks, unleashing more than US$10 billion (RM35.6 billion) in spending on equipment and jumpstarting growth in the maturing mobile market.

(source: Reuters)