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Chinese government policy makers are set to test private funding models in an attempt to find new ways of generating finance and liquidity for its tightly-controlled telecom sector. Traditionally, China’s state-owned operators attracted billions through public listings in New York and Hong Kong while preserving the management and rights of the parents. The policy has been labelled as ‘mixed ownership’ as a means of raising capital.

The plan appears to be at this early trial stage to add private sector investors on to the share register at a number of state-owned enterprises such as China Unicom LTD has been identified by policy makers as being the most financially fragile telco – and has been nominated to be the telecom sector nominee for the private funding test model.

When queried on this in November last year, Unicom confirmed that negotiations regarding this issue had begun – but stated at that stage that no decision had been made by either management or government officials.

It has been reported that China’s internet giants Baidu Inc. Alibaba Group and Tencent Inc. are likely investors in the private funding model. They all have networks-related businesses, offering cloud services and operating as MVNO licensees, and could be powerful industry partners as well as significant investors. They are no doubt reluctant to put resources into a cash-strapped state enterprise, but as players in China's highly regulated Internet market they may have limited say in the matter.

In contrast to this decision in relation to state-owned enterprises, telecom newcomer China Tower Co. has wasted no time in going public in an attempt to raise cash is reportedly aiming for an Initial Public Offering (IPO) next year.

It was formed in 2014, with the task to own and manage telecom towers all over China - it has racked up impressive numbers in the process, it invested 95 billion yuan in cell sites, which saved the industry the equivalent of building just over half a million base-stations.

At an annual work conference in Beijing last month, it was disclosed that the tower sharing rate has increased from 20% to 70%.

In another signpost to the future, China Telecom Corp LTD says it has raised around 10 billion yuan from private investors to support broadband deployment.

Chairman and CEO Yang Jie, interviewed by a Chinese website, did not give details but cited rural rollouts in the southern provinces of Jiangxi and Fujian. China Telecom has built a back-end system enabling private investors to follow project progress and measure investment performance, Yang said.

He said the company was working on creating "different models for private capital to enter the broadband market."

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