According to Finance Magazine, Hong Kong listed China Telecom Corporation Limited plans to acquire all the assets of its parent company in Beijing worth an estimated CNY4 billion.
If it goes successfully, it will be the first time that the company has extended its operation to the northern regions of China where its main competitor China Netcom has booming operations.
Set up in June 2002, China Telecom Group (Beijing) is a wholly-owned company of China Telecom. Though the company lacks local network resources in northern China compared with its competitor China Netcom, it has still managed to own many large corporation clients including Bank of China, PetroChina, Huaneng and Lenovo. China Telecom's own released data shows that the company's branches in the ten provinces in northern China achieved a total revenue of about CNY5 billion in 2006, of which CNY1.7 billion was contributed by China Telecom Group (Beijing).
China Telecom Corporation Limited says in the acquisition plan that it is considering shifting to an external growth pattern by investment injection to replace the original Internet growth pattern, which assumed that the fixed-line telephone would be replaced by the mobile phone.
China Telecom Group's representative has told local media that as China Telecom Group (Beijing) is the highest level local branch of the group in terms of EBITDA, the acquisition of the Beijing company is helpful for the group to advance its overall EBITDA rate of its listed company. This assumes that investors trust using EBITDA for such an established business.
In June 2004, China Telecom Corporation Limited completed the acquisition of the asset of its parent company in 21 southern provinces in China.