China Telecom teams up with Microsoft: report

Beijing -- China Telecom, a leading landline phone operator, has teamed up with Microsoft in the Internet search services in China.

Search services for local information, pictures and video images will be unveiled in two months, sources said.

China Telecom boasts 210 million phone subscribers and more than 80 million Internet clients. It also runs more than 400 local portals.

Luo Chuan, the general manager, Microsoft Online Service Group, China Region, said cooperation with China Telecom would expand the market of Microsoft's live search technology and increase its share in the on-line advertising market.

Before entering into the agreement with Microsoft, China Telecom terminated its cooperation with Yahoo! in search services in August.

China Telecom has also instructed its provincial branches and portals to adopt Microsoft technologies and terminate cooperation with other search engines.

Earlier media reports said the cooperation would last till 2008, and that China Telecom would share revenues of the search engine service with Microsoft on a 70-30 split in 2007 and 50-50 in 2008.

In addition, Microsoft will pay $21 million to China Telecom as a base income.

Both parties declined to confirm the report.