The operator of the world’s most-used Internet search engine and China Telecom, China’s biggest Internet service provider, signed an agreement to share revenue from the online ads, Mountain View, California-based Google said Wednesday in an e-mailed statement, without elaborating on financial terms.

The accord, Google’s third partnership with a Chinese telecommunications carrier in the past year, may help the company close the gap on China’s market leader, Baidu. Online ad sales in the country may surge more than sevenfold to US$3.1 billion in 2011 from US$420 million in 2005, Credit Suisse Group estimates.

“This is a big win for Google because Microsoft and Baidu both wanted this agreement with China Telecom,” Foo Xinghua, an Internet analyst at Beijing-based researcher Analysys International, said Wednesday by telephone. “China Telecom likely picked Google because they have better technology for Web ads.”

Shares of China Telecom were unchanged at HKUS$3.87 as of the midday break in Hong Kong Wednesday. Google’s shares fell 0.3 percent to US$477.53 Tuesday in Nasdaq Stock Market composite trading.

The agreement gives Google access to China Telecom’s legion of Web sites that provide Chinese consumers with local business directories for restaurants, dry cleaners, and other services in specific Chinese cities.

Baidu had a 58 percent share of the Chinese search market in the fourth quarter, more than triple Google’s 17 percent and Yahoo! Inc.’s 13 percent, according to researcher Analysys.

Yahoo and EBay Inc. are Web site operators that have teamed up with Chinese companies after struggling to win market share in the country. In 2005, Yahoo forged a partnership with Alibaba.com, the country’s biggest online retailer. EBay has partnered with billionaire Li Ka-shing’s Tom Online Inc. last year.

Microsoft, the world’s biggest software maker, signed an agreement with China Telecom last year to provide search services for the Chinese company’s 114 directory Web site. Microsoft has also partnered with Baidu and state-owned Shanghai Alliance Investment Ltd.

China Telecom’s agreement with Google won’t affect its previous relationship with Microsoft, Jacky Yung, a Hong Kong- based spokesman for China Telecom, said Wednesday by telephone. He declined to comment whether Microsoft and Baidu made competing bids to sell ads on the carrier’s Web sites.

Richard Feng, a Beijing-based spokesman for Microsoft’s Internet services unit in China, declined to comment if the company competed against Google for the China Telecom contract. Wei Fang, a spokesman for Beijing-based Baidu, didn’t immediate return calls to his office seeking comment.

Google and China Mobile Ltd., the nation’s biggest wireless carrier, began offering Web site searches on mobile phones in January. The company has also signed an agreement with the parent of China Netcom Group Corp. (Hong Kong) Ltd., the nation’s second-biggest Internet service provider, in February to provide search service for the carrier’s Cncmax.cn Web site.

China, the world’s second-biggest Web market by users after the U.S., was home to 137 million Internet users at the end of last year, according to the China Internet Network Information Center, a government-backed agency that licenses online domain names.

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