Following the establishment of a European branch office seven months ago, China's second-largest fixed-line operator China Netcom announced on November 1 its plan to open a European headquarters in London.

The move is expected to drive China Netcom into direct competition with local carriers - such as Cable & Wireless - over the businesses of VoIP (Voice over Internet Phone) services as well as high-speed voice and data links for enterprises. Also, China Netcom's headquarters plan is seen as part of the efforts to expand overseas telecom business under the Chinese government's "go global" policy. Competition with US, Japanese, and European companies in particular is noted in the said policy.

In related news, while China Netcom is engaged in aggressive expansion abroad, Spanish Telef鏮ica announced on October 30 that it would increase its stake in China Netcom to 10% by year-end 2007. At present, Telef鏮ica holds a minority of 5% for 418 million Euros (US$604.5; US$1 = 0.7 Euro) in the company.