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China Telecom to Pay Unicom $14 Billion for Network

China Telecom and its state parent will pay more than $14 billion to buy a wireless network owned by the China Unicom group, entering a lucrative mobile arena in the first deal reached under Beijing's sweeping overhaul of the world's largest telecoms industry.

Cell phone tower, telcom, telecom
Cell phone tower, telcom, telecom

An executive at one of the firms with direct knowledge of the deal told Reuters that China Telecom and its parent will pay 100 billion yuan (US$14 billion) for the Code Division Multiple Access (CDMA) network owned by the parent of China Unicom.

In an agreement to be signed on Monday, China Telecom's parent will pay 60 billion yuan for the asset -- long the weaker performer of Unicom's two networks -- and its listed unit will cover the rest, the executive said on condition of anonymity. Details of the deal are expected to be announced at a Unicom press conference later today, with top executives present.

Beijing unveiled a long-awaited, sweeping blueprint for the overhaul of its trillion-dollar telecoms sector on May 24, directing the merger of the nation's biggest carriers into three full-service players in what has been called the world's largest industrial reorganization.

Under the blueprint, China plans to issue three licenses for high-speed third-generation mobile services and called for a merger of Unicom and Netcom, China Telecom's smaller rival.

Analysts say the wide-ranging re-organization might open opportunities for foreign investment. China Telecom is in discussions with several potential strategic investors now, the executive said.

"The firm has received investment interest from a few interested parties," the source said. "The firm is now considering several fund-raising options but hasn't decided yet."

Lehman Brothers is advising Unicom on the network acquisition deal and UBS will advise the China Telecom group, the executive said.

Shares in China Unicom, Netcom and Telecom have been suspended since May 23, when the government unveiled a series of leadership changes among the country's top telecoms carriers, which include top global wireless operator China Mobile.