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China Telecom to buy parent's 3G assets for over $19 billion: sources
HONG KONG |
HONG KONG (Reuters) - China Telecom Corp Ltd (0728.HK) (CHA.N), the smallest of the country's three carriers, plans to pay more than 120 billion yuan ($19 billion) for its parent's 3G assets, a price that surpasses their combined book value, two sources familiar with the matter said.
China Telecom, which currently leases 3G bandwidth and infrastructure from its state-owned parent China Telecom Corp, is seeking to acquire the assets to cut long-term costs.
The unit's chairman, Wang Xiaochu, said earlier this year that the assets have a book value of about 120 billion yuan, and that the Hong Kong-listed carrier plans to complete the acquisition before the end of 2012.
"The amount won't be below the book value of the assets," said one of the sources with direct knowledge of the plan, declining to be identified as he was not authorized to speak to the media.
China Telecom, the country's dominant fixed line carrier, will rely on its own resources and debt financing to fund the purchase and doesn't plan to issue new shares, the sources said on Friday.
The carrier is expected to announce plans later this month on the acquisition, they said.
China Telecom's spokesman said the company plans to acquire the mobile network assets from its parent by the end of this year and will submit the proposal to shareholders for approval in due course. He declined to comment further.
The leasing fee paid by China Telecom, which totaled 19 billion yuan last year, is rising as the number of Chinese mobile subscribers increases, analysts say.
China Telecom signed a deal with Apple Inc (AAPL.O) earlier this year to carry iPhones as part of its efforts to draw more higher-end 3G users into its network.
The carrier, which competes with China Mobile (0941.HK) and China Unicom (0762.HK), has 144.18 million mobile subscribers as of June, including 50.96 million 3G subscribers.
China Telecom's shares were down 0.76 percent at HK$3.93 by the midday break, compared with the main Hang Seng Index's .HSI 0.91 percent fall.
(Reporting by Alison Lui and Lee Chyen Yee; Editing by Ryan Woo)
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