Both China Telecommunications Corporation and China United Telecommunications Co., Ltd. issued a follow-up announcement on China Telecom's acquisition of China Unicom's CDMA network.
The total price for the acquisition is said to be CNY110 billion, instead of the CNY100 billion as earlier predicted, of which China Telecom reportedly will spend CNY66.2 billion to acquire China Unicom's CDMA network asset and its listed company China Telecom Corp. Ltd. will purchase the latter's CDMA network service for CNY43.8 billion.
China Telecom said in the announcement that the acquisition of China Unicom's CDMA network and CDMA service would be conducted simultaneously and it would sign a CDMA leasing agreement with China Telecom Corp. Ltd. in the future.
China Unicom announced that it had signed a framework agreement with China Telecom on transferring its CDMA service and would sell the CDMA service for CNY43.8 billion to China Telecom Corp. Ltd and the CDMA network asset for CNY66.2 billion to the China Telecom Corporation.
The parties agreed that the first schedule of payment, which accounts for 70% of the total, will be paid in cash on the day of the transaction. The second payment, accounting for 20%, shall be fulfilled also in cash three days after the transaction and the third payment, accounting for 10% of the total, will be paid in cash by no later than March 31, 2009.
China Unicom emphasized that selling of CDMA service to China Telecom would help it further define its business focus and it smoothly transit from GSM technology to 3G. The company's management believed that the restructuring would be a new start for the company's future development.
Besides, China Unicom also announced the amalgamation with China Netcom by share exchange.
Wang Xiaochu, president and CEO of China Telecom, was quoted by the local media saying that the price for acquiring China Unicom's CDMA network is a bit too high. There is also a rumor saying that China's State-owned Assets Supervision and Administration Commission of the State Council may provide CNY30 billion to CNY50 billion to China Telecom to cover the expenditure on the acquisition.