Share prices of three major telecommunication companies in China went up on Thursday after authorities announced that the firms will pool their resources to form a new company.

China Unicom, which is based in Hong Kong, China Telecom as well as China Mobile, will use more than $30 billion (over 230 billion yuan) of their combined assets to construct the needed hardware for the new China Tower.

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Their contributions to the joint venture will guarantee them a stake in the new enterprise. China Unicom will contribute assets valued at more than over $18 billion (more than 155 billion yuan) for a 28 percent in China Tower. China Telecom will get a 28 percent stake for contributing about $5 billion (over 34 billion yuan) in assets, and China Mobile holds the biggest share of 38 percent with a contribution of more than $18 billion (116 billion yuan). A fourth share holder, China Reform Corporation, will own just six percent in the company for its monetary contribution.

Shares of China Unicom shares by almost 5 percent on Thursday noon at the Hong Kong stock market. China Mobile's stocks also went up by 3 percent, while those of China Telecom surged by almost four percent.

The telecommunication merger is reportedly part of an ongoing campaign by Beijing to reduce the cost of maintaining a government bureaucracy that needs around $16 trillion to operate.

The three telecommunication companies are losing many of their subscribers to mobile message apps such as WeChat.

Financial observers believe that China Mobile's two smaller partners will gain much from the venture since they will be given be access to a bigger infrastructure. The two may even get more subscribers as their capabilities increases, according to Cynthia Meng, an analyst from Jefferies.

The analyst believes, however, that China Mobile will still maintain its leading position in the Chinese market.

China Mobile has announced that it expects to receive payment in cash for its contribution to China Tower. Within a month of the deal, at least $700 billion (about 5 billion yuan) will be paid as first payment.

By combining their resources, experts agree that the three telecom firms will be able to offer more competitive 4G wireless services to their customers.

Tagschina telecom, China Mobile, chinese telecommunication merger, china tower, china wireless service