The State Council of the PRC has issued the Decision of the State Council on Revising and Repealing Certain Administrative Regulations (国务院关于修改和废止部分行政法规的决定) ("Decision"), which came into effect on 1 May 2022. The Decision revised the Administrative Provisions on Foreign-Invested Telecommunications Enterprises (2016 Revision) (外商投资电信企业管理规定) ("Provisions on FITE 2016") to lift relevant requirements imposed on foreign investment in the telecom sector in China. Some of the key amendments are set out below.
- The Provisions on FITE 2016 required that the main foreign investor should have "good track record and operational experience", meaning that holding companies or financial investors which have not participated in the operation of telecom businesses might not be eligible to invest in such industry. The Decision has since removed this track record requirement, reducing barriers for foreign investment and further expanding the opening of China's telecom sector.
- The cap of foreign ownership ratio in an FITE operating basic telecom services ("BTS") (except radio paging services) remains at 49% and the cap of foreign ownership ratio in an FITE operating value-added services (including the radio paging business in BTS) remains at 50%. However, the Decision adds an exception to allow the State to adjust these ratios, providing a legal basis for the Government to further relax and lift the foreign ownership ratio cap.
- The Decision has simplified the procedure for obtaining a licence for telecom business and shortened the Government's processing time for granting a license for telecom business.
