Pressure grows on foreigners to take payouts for joint ventures
China Unicom's foreign investors could be barred from future investment in the mainland's telecommunications industry if they do not wind up their joint ventures with the mainland's second-biggest operator, according to a warning by the Ministry of Information Industry (MII) yesterday.
Xinhua quoted an unnamed senior MII official as saying the investors would otherwise face 'big losses', hinting they might lose their initial return on investment.
About 45 foreign companies invested nearly US$1.4 billion in China Unicom's mobile networks under joint ventures that the government last year deemed 'improper'.
Beijing, which bans foreign investment in the telecoms industry, earlier this year ordered Unicom to end the deals.
Unicom has been offering payouts equal to the initial cost of investment, plus a small return of about 7 per cent.
However, the investors have been holding out for either bigger sums or equity stakes in Unicom, which is planning a public listing next year on either the Nasdaq or Hong Kong stock exchanges, or both.
A number of investors also want to be assured of preferential treatment in Unicom's future projects, such as its Internet telephony and broadband networks.
But the MII yesterday said that if the investors did not terminate their projects with Unicom soon, their chances of re-entering the mainland's telecoms market were 'slim'.
Japan's Nippon Telegraph and Telephone has reportedly backtracked from its original wind-up agreement with Unicom in an attempt to get a favourable position in Unicom's next projects, in addition to a payout.
A source said a number of foreign investors were told by Unicom to wait three weeks before returning for talks.
By that time, the MII would have completed meetings at which a number of decisions would be made in the restructuring of the industry.
One foreign investor said: '[Unicom) will relay the message to the State Council and let them know what the foreign partners want.' However, the investor was not optimistic that Unicom would be able to offer substantially better terms.
TELECOMS
