Dutch telecommunications operator KPN will take an 80 per cent stake in a joint-venture holding company set up with the commercial communications arm of the People's Liberation Army. China Electronic System Engineering Co (Cesec), the PLA unit that is the mainland's third telecom operator, will absorb the remaining 20 per cent in the venture. The agreement for the holding company was signed in Shanghai yesterday between KPN chief executive Wim Dik and Cesec Nanjing general manager Jiang Liqun and Cesec Manufacturing Co deputy director Ni Hongqian. The holding company, to be based in Nanjing, will invest in satellite, mobile communications, paging, Internet and other telecom projects through separate entities under its umbrella. To comply with mainland laws, the holding company will not hold more than a 60 per cent stake in these entities. 'Based on this structure, the individual companies - not the holding company - will operate the projects and KPN's share in these companies will be below 50 per cent, which is within the laws of the country,' said Tom van Heesch, vice-president (international acquisitions) of PTT Telecom, KPN's telecom operating company. The venture will start out with a US$5 million investment, but could become sizeable quickly when investment projects are finalised. 'I think we should have a firm idea of the first project in six to eight weeks,' Mr Heesch said. Cesec would like the first venture to be related to satellite technology, but this has not been agreed. The deal was signed during the visit to Shanghai by Dutch Minister of Economic Affairs G.J. Wijers.