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China Netcom's CEO to leave, head VC fund

(HK Edition)
Updated: 2006-02-25 08:40

Edward Tian, chief executive of China Netcom Group Corp, plans to leave the helm of China's number-two fixed-line phone company to head a new venture fund, sources familiar with the situation said.

The high-tech entrepreneur planned to raise more than US$150 million from investors including China Netcom, media mogul Rupert Murdoch and Hong Kong's PCCW Ltd, the sources said yesterday on condition of anonymity.

"It'll be a venture fund targeting broadband in China," one source close to the situation said, adding that no specific departure date had been determined.

A spokesman for China Netcom said in a statement that Tian was still working in his current capacities as chief executive of China Netcom and deputy general manager of the firm's parent company.

However, he confirmed that the parent company had plans to form a new venture fund, but he said there was no timetable as to when that would happen.

The departure would take Tian, a Texas Tech University alumnus prominent during the dotcom bubble who set up software firm AsiaInfo Holdings and then Netcom, back to his start-up roots.

Many had speculated that Tian might eventually leave Netcom, which is dominated by the fixed-line phone business.

Netcom started in 1999 as an operator of a high-speed telecom network linking more than a dozen Chinese cities. The firm's early backers included Murdoch and investment bank Goldman Sachs.

Many saw the investment as a way of getting into the mainland's potentially lucrative telecom sector, which is officially open to foreign investment, though many companies complain that forming ventures in the market is difficult.

Netcom, which raised US$1.3 billion in its initial public offering in Hong Kong in 2004, reported a net profit of 6.36 billion yuan (US$791 million) for the first half of 2005, up 30 per cent from the previous year.

Major stake holders include Spain's Telefonica, which bought a small holding in the Chinese carrier last year and said in November it would boost the stake to nearly 10 per cent.

Netcom, whose shares were up 0.36 per cent on Friday, bought 20 per cent of PCCW, Hong Kong's former fixed-line phone monopoly, last year for US$1 billion.

Netcom's main competitor is China Telecom Corp, the nation's top fixed-line carrier, but it is also hoping to offer mobile service after China awards third-generation (3G) licences.

(HK Edition 02/25/2006 page3)