China Telecom plans to establish a plant to produce electronic book readers in eastern China's Zhejiang province, and is negotiating with telecom equipment manufacturer Datang Telecom Technology (600198.SH) in joint developing the devices, said an insider.

"It is widely believed that e-book readers will gradually spread across domestic market, and e-book readers capable of accessing 3G networks will be the focus of Chinese telecom operators' competition. Therefore, China Telecom expects to make deployment early," said the source.

In fact, China Mobile (00941.HK; CHL.NYSE), the country's largest telecom operator, had constructed a production base for e-book readers in the second half of 2009 in Zhejiang province, and China Unicom (00762.HK; CHU.NYSE; 600050.SH), the second largest mobile telecom operator in China, plans to build a production base somewhere in southern China's Guangdong province.

China Telecom is likely to take a reference of China Mobile's mode of establishing the e-book reader production base.

According to Lu Xiangdong, vice president of China Mobile, the carrier expects to accustom users to read during their idle time via mobile phones, and gradually has them habituated to read at any time, and make high-speed wireless downloads via China Mobile's customized 3G e-book readers.

Industrial insiders estimate there will be more than 30 percent cell phone users reading e-books and e-papers through handsets over the next five years; sales of China's digital publications will take up 50 percent of the publication industry's total by 2020; and 90 percent books will have electronic versions by 2030.

Source:tmcnet