“…The multilateral deals are part of a government-mandated restructuring of China’s telecommunications sector unveiled late last month. That plan called for the country’s six telecommunications companies to merge into three groups, with hopes of creating a more competitive telecommunications industry and to prevent the formation of a monopoly…”

Source: AP

 Mobile service provider China Unicom Ltd. said Monday it will acquire fixed-line operator China Netcom Group Corp. Ltd. in a share swap valued at $56.3 billion.

Separately, China Telecom, the country’s biggest fixed-line operator, and its parent will buy the code division multiple access, or CDMA, network and accompanying business from China Unicom companies for $15.86 billion).

The multilateral deals are part of a government-mandated restructuring of China’s telecommunications sector unveiled late last month. That plan called for the country’s six telecommunications companies to merge into three groups, with hopes of creating a more competitive telecommunications industry and to prevent the formation of a monopoly.

Under the deals announced Monday, each existing China Netcom share will be swapped for 1.508 new China Unicom shares, the companies said. The total value of the deal is based on China Unicom’s and China Netcom’s May 23 share price of HK$18.48 and HK$27.05 respectively.

China Unicom Chairman Chang Xiaobing said at a press conference that the company expects the deal to close by the end of 2008.

In a separate statement to the Hong Kong stock exchange, China Telecom said its parent, China Telecommunications Corp., will acquire the CDMA network from China United Telecommunications Corp. for $9.54 billion and will buy China Unicom’s CDMA operations for $6.32 billion. The CDMA technology is popular in the U.S. and Asia.

China Telecom said the company can now branch out into the mobile business.

“It will provide the company with a solid foundation upon which to build and develop the next generation mobile business and service,” it said.

China Unicom is the only CDMA service provider in China, with 42 million subscribers at the end of 2007.

The CDMA business posted a pretax profit of 1.2 billion yuan ($173.4 million) for 2007 and 240 million yuan ($34.7 million) for the three months ended March.

Shares in China Unicom, China Telecom and China Netcom had been suspended from trade since May 23 pending the announcements.

Trading in the shares of all three will resume Tuesday, the companies said.