China Unicom Plans to Buy Provincial GSM Networks
China mobile carrier China Unicom plans to complete the
purchase of 10 remaining provincial GSM mobile networks
from its parent China United Telecommunications Corp.
by the end of the year. The 10 networks are in the relatively
underdeveloped provinces of Gansu, Guizhou, Hainan, Hunan,
Inner Mongolia, Ningxia, Qinghai, Shanxi, Tibet and Yunnan.
Goldman Sachs has put a price tag of US$2 billion on
the 10 networks, while Deutsche Bank has estimated the
purchase would cost US$5.5 billion.
China Unicom reportedly hopes to swap out its loss-making
paging business with its parent, and has written off a
560 million yuan provision for its paging assets, leaving
them with a book value of three billion yuan.
In December of last year, China Unicom completed a 22.5
billion yuan purchase of GSM mobile networks and CDMA
operations in nine provinces from China United. Following
this acquisition, China Unicom plans to acquire the GSM
mobile networks in 31 provinces, and its nationwide CDMA
mobile operations.
China Unicom listed on the Hong Kong Stock Exchange in
June 2000, and like many other state-owned enterprises
(SEOs) in China which have pursued the same route, is
known as a "red chip". Using a process known
as injection, these Chinese companies first list on the
HKSE, then shift their assets under the name of the listed
company. China Unicom plans to do this in an orderly,
step-by-step process.
Goldman Sach's estimates that the 10 networks will add
11.4 million mobile subscribers, giving a total of 81.3
million subscribers. Of this amount, 61.58 million are
GSM subscribers, while 13.34 are CDMA subscribers.
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