China Telecom to buy $19 billion of 3G assets?
China’s dominant fixed-line carrier China Telecom is reportedly looking to buy 3G assets from its parent companies for over $19 billion, a price that surpasses their combined book value.
A China Telecom spokesman reportedly told Reuters that the company plans to acquire the mobile network assets by the end of the year, and will submit the proposal to shareholders for approval in due course.
The move is seen as a means of cutting long-term costs as the leasing fee China Telecom pays parent company China Telecom Corp for 3G bandwidth and infrastructure is increasing with rising mobile subscriber numbers.
The deal will be financed by China Telecom’s own resources and debt financing with no plans to issue new shares. Plans for the acquisition are expected to be officially announced later this month.
China Telecom stands in third place in terms of mobile subscribers in the world’s largest wireless market with 13.4% share and 135,830,000 subscribers in March 2012.
Wireless focussed China Mobile leads the market with 65.9% share and 667,195,000 subscribers during the same period, while second ranked China Unicom had 20.7% and 209,490,000 subscribers, according to TeleGeography.