Amended Regulations Could Open Telecoms Sector

By Fraser Mendel and Shan Liu of Morrison & Foerster.

The State Council of the PRC recently issued amendments to regulations covering the administration of Foreign-invested Telecommunications Enterprises (FITEs)《外商投资电信企业管理规定 (修订)》. While it is perceived that the regulations were amended in response to pressure to open China's telecommunications sector to foreign investment, at this time it is not clear if the amendments will actually have that effect.A key change made by these amendments is reducing the minimum registered capital requirement for foreign investors engaging in basic telecommunications services. Under the PRC, Telecommunications Regulations《中华人民共和国电信条例》 , telecommunication business is divided into basic services and value-added services. Basic services are services providing public network infrastructure, public data transmission and basic voice communication, while value-added services are telecommunication and information services that use public network infrastructure. The amendments only address capital investment requirements for basic services, and do not affect such requirements for value-added services.