China Mobile, the world’s largest mobile phone company, has been granted permission to begin offering fixed-line services as part of a move that unleashes the long-awaited shake-up of the country’s sprawling telecommunications industry.

Word of the restructuring, which will also allow fixed-line operators to finally enter the faster growing mobile market, sparked a share-dealing frenzy in Hong Kong. Investors piled into a basket of stocks that are now expected to feature in a flurry of mergers and acquisitions.

Shares in China Unicom, China Telecom and China Netcom spent part of the trading session suspended after a deluge of “buy” orders. Unicom and Netcom both soared 12 per cent before their shares stopped trading.

Few industry experts expect the dominance of China Mobile to suffer any serious dents from the changes, but analysts said that they would undoubtedly strengthen the hands of its main competitors.

The regulatory changes, which are supposed to help flagging fixed-line telecoms operators as consumers increasingly use only mobile phones, are understood to have been accompanied by boardroom reshuffles in the industry.

The new rules allow China Mobile, with its 584 million subscribers, to assume control over China Tietong Telecommunications. Analysts speculate that future deals will include the sale of the networks of China Unicom, another mobile phone group, to China Telecom and China Netcom, the fixed-line operators.

The regulatory changes come ahead of the national roll-out of 3G services – the introduction of higher bandwidth networks, which require heavy investment in infrastructure. The restructuring is expected to improve the capital bases of the big players. The Government is also planning to inject capital into the newly organised companies as they begin their investment spree.

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