China Telecom Moves to Purchase Assets from State-Owned Parent

Details: Category: Investment; 07 August 2012; 8825 views

China Telecom, the smallest of China’s three major carriers, is seeking to purchase 3G infrastructure from its state owned-owned parent, China Telecom Corp. The infrastructure is currently leased to China Telecom; the purchase is aimed at decreasing the operator’s long term costs.

China Telecom is also China’s dominant fixed line carrier. China Telecom itself is majority state owned, with a proportion of its minority shares traded in Hong Kong and New York.

The deal is expected to exceed China Telecom’s book value of 120 billion Yuan (US$19 billion). Reports indicate that China Telecom seeks to conduct the deal using its own credit and resources to raise finances for the purchase. China Telecom are said to aim for completion by the end of 2012.

The move comes at a time when China Telecom’s lease of 19 billion Yuan per year for 3G facilities looks set to increase as competition between mobile carriers for 3G customers increases. China Telecom has also recently begun carrying Apple iPhones, further signifying its commitment to the 3G market. There was a minor jump in share prices following Reuters’ initial reports of the purchase on the 3rd of August.