Beijing has no plans to break up China Unicom in spite of growing speculation that the country's second largest mobile operator will sell one of its wireless networks to rival operators, according to China Netcom, the number two fixed-line carrier.

Zhang Chunjiang, executive chairman of China Netcom, said the State-Owned Assets Supervision and Administration Commission (Sasac), which had denied similar reports in January, told him ?it had not changed its mind?.

China is expected to launch a restructuring in the state-controlled telecommunications sector this year ahead of the award of 3G mobile licences. Most analysts have predicted that the reorganisation would lead to a break-up of Unicom.

The official China Daily on Wednesday reported that Chinese regulators were studying plans to merge Unicom's GSM network with Netcom, while China Telecom, the biggest fixed-line operator, would buy Unicom's loss-making CDMA operation.

China Telecom, which operates in southern China, said in February it wanted to team up with Netcom, which operates in the north, to buy Unicom's GSM operation.

Mr Zhang said on Wednesday Sasac told him it had not made any decision on how to restructure the sector.

His statement comes as Netcom, which operates in eight regions including Shanghai and Beijing, said it planned to acquire four provincial networks from its state-owned parent to boost revenues which analysts said could happen this year.

?Performance in the four provinces is in line with our own businesses already. By adding them to the listed company, I believe they will bring growth,? said Edward Tian, Netcom's chief executive. The four operations are in the provinces of Jilin, Heilongjiang, Inner Mongolia and Shanxi. In the first results announcement since its US$1.13bn listing in Hong Kong and New York last November, Netcom said on Wednesday its 2004 revenue rose 10 per cent to Rmb61.5bn ($7.4bn). Net profit was Rmb5.9bn last year, against a loss of Rmb15.1bn in 2003.

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