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China Unicom is in negotiations with two other major telecom operators, China Mobile and China Telecom, to cooperate in network-building and the operation of 5G services, according to a report by caixin.com on Wednesday.

China Unicom is seeking different means of cooperation with the two other companies mainly to reduce the cost of 5G constructions and to increase efficiency, Fu Liang, a veteran industry analyst, told the Global Times on Thursday. 

China Telecom and China Unicom will cooperate to deploy 5G base stations, as its 5G spectrum range by the Global System for Mobile Communications Association is similar to China Unicom’s, Fu said. Cooperation on base station construction has been going on, and it is expected to increase spectrum efficiency and network quality for 5G.

China Mobile and China Unicom will seek to share its 5G business with regard to roaming, mostly because it can increase 5G network coverage among different operators, according to Fu.

Behind the three companies’ cooperation plans are the immense cost of 5G construction and decreasing profitability. According to the report by caixin.com, China Unicom will spend 8 billion yuan ($1.14 billion) on 5G construction, on the deployment of around 40,000 base stations. China Unicom is facing pressure with its revenue. 

According to China Unicom’s Wednesday midterm financial report, the company’s revenue dropped 2.8 percent to 144.95 billion yuan. Service revenue dropped 1.1 percent to 133 billion yuan and mobile service revenue dropped 6.6 percent in the first half of 2019. 

“The cooperation on 5G rollout, especially on sharing 5G spectrum and co-building 5G base stations will significantly reduce the operation cost for the network providers,” Fu noted, “But in the larger picture, competition will still exist in the different service lines such as the network for mobile phones and broadband services among the major networkers, including the newly-joined China Broadcast Network.”