China Telecom and China Netcom, the largest fixed-line operators in China, signed an agreement Tuesday allowing their prepaid IC calling cards to be used to make phone calls over each other's networks, Yang Qianya, a manager of China Netcom, said.

At present, domestic fixed-line market is ostensibly divided into halves, with China Telecom dominating the market in South China and China Netcom in the north.

Prior to this new agreement, China Telecom's prepaid IC cards could only be used to make telephone calls from phone booths in the south, while China Netcom's IC cards could only be used in the north. The operators' IC cards are designed for calling at pay phones.

"According to our agreement, China Telecom users that buy prepaid cards in the south can now make phone calls in northern provinces over China Netcom's networks, and vice versa," Yang said.

At the end of June this year, there were a total of 1.54 million pay telephones installed throughout the country that accepted payment via IC cards, while a total of 900 million IC cards had been issued. The total value of these IC cards was 31.6 billion yuan (US$3.9 billion), according to Chinese portal Sina.com.

The IC card market, however, has been experiencing slowed growth in recent years, due to competition from prepaid IP calling cards and the popularity of mobile phones.

"This new agreement will boost sales of prepaid IC cards," Wang Guoping, an analyst with Galaxy Securities, said. "This is also the first time that China Telecom and China Netcom have cooperated so deeply, even allowing the use of each others networks. But, it was unlikely that both carriers would build their own networks in each other's territories."

(Shenzhen Daily July 28, 2005)