* Eyes private funds for new online business areas - paper
* Beijing piloting moves toward private-public ownership
(Adds additional company comment, background on reform drive)
By Paul Carsten
BEIJING, May 14 State-owned China Telecom Corp
Ltd, China's third-largest carrier, is seeking private
investment to help it develop new businesses like online payment
systems and social networking, the official English-language
China Daily reported.
"Joint ventures and acquisitions are both possible ways for
us to cooperate with private firms," said Wang Xiaochu, China
Telecom's chairman, according to a report in the newspaper on
"We are ready to leave operating rights to smaller but more
capable shareholders even when China Telecom controls the
majority of shares," Wang said, according to China Daily.
China's top conglomerates, including Sinopec, or China
Petroleum & Chemical Corp , and investment
company CITIC Group Ltd have announced spin-offs and
restructuring plans in recent months, while local authorities
have begun experimenting with new management structures.
The moves follow the November announcement by China's
Communist Party that the government would push for reforms to
increase the role of the market and private sector in
state-owned enterprises (SOEs), widely seen as inefficient.
China's three state-owned telecommunications carriers have been
targeted to push ahead with new measures.
The companies - China Mobile Ltd, China Unicom
Hong Kong Ltd and China Telecom - are also seeing the
introduction of private competition in the form of mobile
virtual network operators (MVNOs), who lease network capacity
from the carriers and sell their own subscription packages to
China will also trial a new value-added tax for the carriers
from June 1, which analysts say will have a negative impact on
During the March session of China's parliament, Premier Li
Keqiang highlighted telecommunications firms as well as the
banking, oil, electricity, railway, resources development and
public utilities sectors as targeted recipients of non-state
PetroChina Co Ltd said on Monday it
plans to sell more multi-billion dollar pipeline projects to
raise cash, cut capital spending and promote private investment
in energy, after divesting part of its pipeline assets last
That follows the February announcement by Sinopec that it
would sell 30 percent of its petrol station and retail assets.
In April, CITIC Pacific agreed to buy the main
operating unit of its parent, state-backed CITIC Group, for
$36.5 billion, the biggest injection by any Chinese firm into a
Hong Kong-listed company, according to analysts.
China's SOEs are undergoing other changes.
The Ministry of Finance announced earlier this month an
increase in the dividends SOEs must pay in 2014 to the
government, a step to reform China's income distribution. The
increase of five percentage points is expected to hit the free
cash flow of the SOEs, said Moody's ratings agency in a note
(Reporting by Paul Carsten; Additional reporting by Matthew
Miller; Editing by Stephen Coates and Kenneth Maxwell)