China Telecom, China’s largest fixed-line phone provider, has announced plans to buy regional phone operator Beijing Telecom for $793m.

The government-controlled former monopoly, which still owns about 70 per cent of China’s fixed telephone lines, has struggled to cope with a rapidly evolving market and competition from mobile phone operators.

“Due to intensifying mobile substitution, China Telecom experienced negative growth in access lines in service for the first time [in 2007], and voice business revenue decreased by 7.9 per cent from 2006,” the company said in a statement.

Charice Wang, an analyst at research firm Ovum, explained that China Telecom has been facing strong competition from China Mobile as customers switch to mobile services under increasing fixed-mobile substitution.

“China Telecom’s traditional voice business has been [declining in] recent years,” she said.

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