China Telecom has revealed it has signed an agreement with Taiwan's Chunghwa Telecom to share resources including network access, products and technology.
The companies will also jointly develop business opportunities in Taiwan's western coast, Dow Jonesreported.
The announcement comes as China Telecom's chairman, Wang Xiaochu, visits Taiwanese capital Taipei this week.
According to Dow Jones sources, the agreement with Chunghwa may be the first of several. Xiaochu reportedly also plans to hold meetings with vendors such as HTC and Compal, as well as more fellow carriers.
The insiders, whose reports were not confirmed by the operators, said he would look for a regional alliance that included non-CDMA networks, suggesting cooperation on applications with all five Taiwanese cellcos - Chunghwa, Far EasTone, Taiwan Mobile, Vibo and Asia Pacific Telecom.
The CDMA operator also wants to tap into the huge resources of Taiwan's device manufacturing community to widen its range of CDMA products.
Telecom has fallen well behind its two rivals in cultivating close relationships with foreign carriers.
China Mobile is a leading light in operator apps initiatives such as WAC and has many joint activities with Vodafone and Verizon Wireless, as well as holding a stake in Far EasTone.