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Mobile

China Begins $70B Carrier Revamp

Having unveiled the details of their various merger and 3G plans at the end of May, China's carriers are forging ahead with their asset swaps and acquisitions in deals worth tens of billions of dollars. (See China to Get 3G – At Last! and China Begins Carrier Revamp.)

China Unicom Ltd. (NYSE: CHU) today announced that its CDMA operations and network are being acquired by China Telecom Corp. Ltd. (NYSE: CHA) for 110 billion Chinese Yuan (US$15.9 billion). (See Unicom Details M&A.)

The move will create one of the world's biggest operators: At the end of April Unicom had 43 million CDMA subscribers, while China Telecom had 216.3 million fixed-line customers, including 38.4 million broadband customers.

Separately, Unicom is merging its GSM operations (125.4 million subscribers) with fixed-line operator China Netcom Corp. Ltd. (NYSE: CN; Hong Kong: 0906), which has nearly 109 million customers (end of April 2008), including more than 22 million broadband subscribers.

Each share in Netcom will be exchanged for 1.508 Unicom shares. The operators value the deal at $439 billion Hong Kong dollars ($56.3 billion).

Those deals will create two of China's new, giant operators, each of which has hundreds of millions of customers in a country with a total population of about 1.3 billion. (See table below.)

Table 1: China's Three New Carrier Giants
Fixed line customers (end of April 2008) Mobile customers (end of April 2008) Total number of subscribers
China Telecom plus China Unicom CDMA 216.3 million 43 million 259.3 million
China Netcom plus China Unicom GSM 109 million 125.4 million 234.4 million
China Mobile plus China TieTong (Railcom) 20 million* 399.5 million 419.5 million*
* China TieTong subscriber number is the latest available, from the end of 2006
Source: Carrier data




The other merger is that of wireless giant China Mobile Communications Corp. , which has nearly 400 million mobile subscribers, with fixed-line minnow, China TieTong Telecommunications Corp. , which has more than 20 million customers. Speculation in the Chinese media suggests that TieTong, which is wholly owned by the government, may just be folded into China Mobile for free.

— Ray Le Maistre, International News Editor, Light Reading

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