China Telecom, parent sign mobile deal

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China's top fixed-line carrier, China Telecom, and parent sign deal for new mobile network

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Posted 29 July 2008 @ 08:59 am HKT

HONG KONG (AP) -- China's leading fixed-line phone company, China Telecom, and its parent have signed a deal to acquire a wireless network and business for 110 billion yuan ($16 billion) as part of a recent shake-up of the country's telecommunications industry.

(AP Photo/Vincent Yu)

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China Telecom and its parent, state-owned China Telecommunications Corp., entered into the agreement Sunday with China Unicom and its parent, China United Telecommunications Corp., the companies said in statements to the Hong Kong stock exchange.

The sale is expected to be completed before year's end.

The deal was initially announced last month as part of a government-mandated overhaul to bring more competition to the country's telecom industry.

Under the agreement, China Telecommunications Corp., was acquiring the code division multiple access, or CDMA, mobile network from China United Telecommunications Corp. for 66.2 billion yuan ($9.7 billion). China Telecom was buying China Unicom's CDMA operations, business and subscribers for 43.8 billion yuan ($6.4 billion).

In a statement Monday, China Telecom said it would lease the new new wireless network from its parent for an amount equal to up to 28 percent of revenue from the new business.

The fees were expected to total a maximum of 4 billion yuan in 2008, 20 billion yuan in 2009 and 35 billion yuan in 2010.

China Unicom is the country's No. 2 mobile-phone provider.

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