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On December 11, 2001, the first day of China's entry to the WTO, the plan to segment China Telecom was announced. This was the second plan of its kind since 2000, and even more stringent. It entails China Telecom's capital and equipment in 10 northern provinces merging with two other Chinese telecommunications enterprises( China Netcom Corporation Ltd., and China Jitong Netcom Corporation Ltd.), to form the China Network Communications Group Company( China Netcom). China Telecom's southern entities will be reorganized into a new company that will retain the name "China Telecom Group Company". This means that six powerful communications enterprises( the other four being China Mobile, China Unicom, China Railcom and China sat) will form new competitive matrix, and a large proportion of capital and equipment will be reallocated from the original china Telecom to other telecom enterprises.

The ministry of the Information Industry is executing the segmentation, and since February, the reorganized companies have begun to appear one by one.

Within this operation, two principles are followed. First, 30 percent of the national long-distance telecommunications network will be reallocated from the original China Netcom. Second, the local telecommunications network in ten northern provinces will also be reallocated form the original China Telecom to China Netcom. The new China Telecom is to retain local networks in 21 provinces in the south and the west.