China's three state-owned carriers form telecoms tower firm

BEIJING (Reuters) - China’s three state-owned wireless carriers have agreed to jointly establish a telecommunications tower company with a registered capital of 10 billion yuan ($1.6 billion), the companies said in filings on Friday.

China Mobile Ltd 0941.HK, the world's largest mobile carrier by subscribers, will hold a 40 percent share of the company. China Unicom (Hong Kong) Ltd 0762.HK will subscribe for shares equivalent to 30.1 percent of the company. China Telecom Corp Ltd 0728.HK, the smallest of the three carriers, will hold a 29.9 percent share.

The tower company, called China Communications Facilities Services Corporation Limited, will “primarily engage in the construction, maintenance and operation of telecommunications towers,” said China Telecom’s filing to the Hong Kong exchange.

The carriers “are at a preliminary stage of considering the injection of certain telecommunications assets,” said China Unicom’s statement.

China's three carriers have been under pressure from falling revenues as mobile users switch from using SMS and voice calls, formerly lucrative sources of income, to mobile Internet services which instead rely on data such as Tencent Holding's 0700.HK WeChat mobile messaging app.

The costly rollout of high-speed 4G mobile networks has also weighed on the companies, each of which had to build its on telecommunications towers to increase network coverage across China.

The joint tower firm could reduce individual spending by the firms and allow them to share the infrastructure, as well as increasing each carrier’s network coverage and quality.

“We believe this will be net positive for all three operators, and will likely result in lower future capex for Telecom and Unicom and possibly new revenue streams for China Mobile, as it sells or rents access to its towers,” said Chris Lane, a Hong Kong-based analyst with Sanford C. Bernstein, in a May research note.

The establishment of the tower company will improve the efficiency of investments and help reduce the overall scale of investments, said China Telecom in its filing.

It will help “reduce duplication and redundant construction of telecommunications towers and related telecommunications infrastructure,” said China Unicom in its own filing, echoing the words of a similar filing by China Mobile.

The joint formation of a telecommunications tower company in China has been expected for a number of months by industry watchers.

($1 = 6.2034 Chinese Yuan Renminbi)

Reporting by Paul Carsten; Editing by Mark Potter