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China Mobile in talks for 10-network purchase
( 2003-12-16 11:18) (HK Edition)

China Mobile (Hong Kong), the world's largest mobile carrier by subscribers, said yesterday it has begun talks to acquire the final 10 provincial networks from its State-owned parent.

The acquisition will give Hong Kong-listed China Mobile all 31 of the provincial networks built by its parent, China Mobile Communications in the world's biggest mobile phone market.

China boasts some 250 million mobile subscribers, roughly two-thirds of whom are served by China Mobile or its parent.

"No financing plan has been formulated," Hong Kong-listed China Mobile said in a statement. "Further announcements will be made by the company when the terms of the acquisition and the related financing are determined."

Core Pacific-Yamaichi analyst Arthur Law said the provinces could carry a price tag of about HK$40 billion (US$5.13 billion).

Many Chinese companies, including the country's three big listed telecoms carriers, have expanded by acquiring assets from their parents. Such companies will initially go public with their most attractive assets, and later expand through purchases from the State-owned parent in deals known as "asset injections".

China Mobile will acquire networks in 10 of China's poorest provinces, including Inner Mongolia, Jilin, Heilongjiang, Guizhou, Yunnan, Tibet, Gansu, Qinghai, Ningxia and Xinjiang.

"They're poorer but it doesn't mean they're less profitable," said UBS analyst Dylan Tinker.

Last month its chief rival, China Unicom, said it would buy nine provincial networks based on the wireless GSM standard from its parent, China United Telecommunications, by year-end for HK$3.02 billion (US$387 million).

In another deal expected to close by year end, China Telecom, the nation's biggest fixed-line phone company, announced it would acquire six provincial networks from its parent for 46 billion yuan (US$5.56 billion).


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