China Unicom sells off CDMA arm to China Telecom

By Wang Xing (China Daily)
Updated: 2008-07-29 15:21

China Unicom Ltd, the country's second largest mobile carrier, signed an agreement on Monday with fixed-line operator China Telecom Corp to sell one of its mobile businesses for 110 billion yuan (US$16.1 billion).

China Unicom said in an announcement that it expects a pre-tax gain of 37.56 billion yuan from selling its CDMA network and would use the proceeds to expand its remaining GSM business.

A pedestrian makes a phone call in front of a China Unicom outlet in Zhengzhou, Henan province. [China Daily]

"Selling the CDMA business will have a positive impact on our business in the future since it will make us focus on developing the GSM business and better prepare for the upcoming 3G market," said Chang Xiaobing, chairman and chief executive of China Unicom.

He said the company will accelerate the pace of developing the GSM business, in which China Unicom had 128 million users by the end of last month.

The scale of the deal between China Unicom and China Telecom was announced on June 2, when China Telecom said it would buy subscribers of China Unicom's mobile telephone network equipment (CDMA) for 43.8 billion yuan and pay 66.2 billion yuan for the network.

The announcement was part of China's long-awaited plan to restructure its telecom industry, in which six operators will be merged into three full-service carriers.

China Telecommunications Corp, the Hong Kong-listed unit of China Telecom Corp, said yesterday in a separate announcement that it will pay its Beijing-based parent as much as 28 percent of annual revenue from the CDMA business as network-leasing fees until 2010.

The company also said it plans to invest up to 80 billion yuan to expand and upgrade the newly acquired mobile network over the next three years, according to a report from Reuters, citing Shang Bing, president of China Telecom's Hong Kong-listed arm.

Wang Xiaochu, president and CEO of China Telecom, has said in an interview that the company will start its mobile business by the end of February next year.

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