Feeds

China Telecom: provincial investment

Potential subscriber base of half a billion

  • alert
  • submit to reddit

Providing a secure and efficient Helpdesk

China Telecom Corp Ltd, the Hong Kong-listed arm of China Telecom, will expand its potential subscriber base to half a billion people, after announcing it would pay its state-owned parent CNY46 billion ($5.55 billion) to acquire six provincial fixed-line networks. The regions have high growth potential, although significant investment will be needed.

China Telecom has been in talks with its parent over the acquisition since July. Under the terms of the deal, it will pay an upfront cash payment of CNY11 billion ($1.32 billion). The remaining CNY35 billion ($4.22 billion) will be paid out over 10 years after the deal is completed. China Telecom will also assume CNY34 billion ($4.10 billion) in debt owned by the six networks. It will use the proceeds of last year's IPO to finance the deal.

The purchase price values the six networks at 7.2 times their forecast net profit, which is estimated this year to be in the CNY6.35 billion ($767 million) region. For the six-month period ending June, China Telecom reported a net profit of CNY9.26 billion ($1.11 billion). The company believes the acquisition will raise earnings by about 30% in the first half.

At the moment, China Telecom controls some of the richest areas in China, including Shanghai, and the provinces of Jiangsu, Zhejiang, and Guangdong. These areas currently have a penetration rate of 25.7%.

The six networks it plans to buy include the provinces of Anhui, Fujian, Jiangxi, Sichuan, and Guangxi, as well as the city of Chongqing. These networks are viewed as potentially high-growth areas, as the penetration rate lags at 13.4%, lower than the national average. However, these regions are also poor and require significant investment.

Following the acquisitions, China Telecom's footprint in mainland China is set to rise dramatically, to potentially 524 million people, or 40.8% of the total population in China. It currently has a 107 million-strong subscriber base.

However, China Telecom is facing increasing competition in its fixed-line and broadband business. Its rival, China Netcom, has been rolling out services in China Telecom's market, mainly in the richer cities of Shanghai and Guangzhou.

Related Research
Voice Business Worldwide
Asia-Pacific and Chinese Wealth Management 2003
Voice Business: Asia Pacific

Providing a secure and efficient Helpdesk

More from The Register

next story
Apple CEO Tim Cook: TV is TERRIBLE and stuck in the 1970s
The iKing thinks telly is far too fiddly and ugly – basically, iTunes
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Israeli spies rebel over mass-snooping on innocent Palestinians
'Disciplinary treatment will be sharp and clear' vow spy-chiefs
Huawei ditches new Windows Phone mobe plans, blames poor sales
Giganto mobe firm slams door shut on Microsoft. OH DEAR
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Show us your Five-Eyes SECRETS says Privacy International
Refusal to disclose GCHQ canteen menus and prices triggers Euro Human Rights Court action
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.
Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.