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China Telecom confirms purchase of infrastructure from parent company

China Telecom, the smallest of China’s three major carriers, is purchasing the CDMA network of its state owned-owned parent, China Telecom Corp. News of the substantial purchase comes at the same time the operator reported a reduction in profits of 8.3% in its h1 report.

The infrastructure is currently leased to the operator, which says the purchase will eliminate substantial fees it used to pay as lease. The move signals deepening commitment to the promising Chinese smartphone market on the part of China’s third operator.

China is projected to be the world’s largest smartphone market in the next few years, with China Telecom announcing earlier this year that it would begin carrying the iPhone.

Previous reports estimated a price tag of around US$19 billion; the final amount was agreed at $13 billion. It is likely that China Telecom will not make dividend payments this year as it funds the purchase.

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