Citic Pacific is in talks to partner a mainland company to invest in China's telecommunications market, a move which may involve selling down its fibre-optic network in the country, according to officials. This is the first tacit admission by the Hong Kong-listed red chip it may trim its stake in the project from 60 per cent to 49 per cent, the maximum that foreigners are allowed as Beijing prepares to join the World Trade Organisation. China is expected to join the world trade body either late this year or early next year. Managing director Henry Fan Hung-ling said that if the proposed alliance materialised, it would strengthen Citic Pacific's mainland telecoms portfolios through connections with the mainland firm, although it might lead to a reduced holding in the valuable network. In return, Citic Pacific would benefit from the team-up, with the exchange of better telecoms investment assets in China. 'That will be positive news,' he said. The move is in line with the red-chip's drive to expand into China's telecoms sector. Citic Pacific is incorporated in Hong Kong but controlled by China International Trust & Investment Corp (Citic Beijing), which is the country's largest trust company and directly controlled by the State Council, or parliament. The red-chip conglomerate is involved in infrastructure, power and trading in the mainland. It also owns 25 per cent of Cathay Pacific Airways and more than 28 per cent of Dragonair. Mr Fan said the company's stake in the network at the moment remained at 60 per cent, as confirmed previously. He said talks with the mainland company had progressed smoothly and they were expected to be finalised by the end of this year. He would not identify the mainland company. Citic Pacific has been hoping the network, which will ultimately include a 32,000-kilometre fibre-optic link to key mainland cities, would help contribute to the group's future earnings engine. The purchase was announced in January this year. Chairman Larry Yung Chi-kin and Citic Pacific's parent, Citic Beijing, each hold the remaining stakes of 20 per cent of the fibre-optic network. On August 28, it was reported that Citic Pacific might be forced to trim its stake in a mainland fibre-optic network to 49 per cent from 60 per cent, to comply with WTO rules. The news led Citic Pacific's intra-day share price down 5.3 per cent to HK$37.70, despite a denial by Mr Yung. Shares in Citic Pacific yesterday closed at HK$31.60, down HK$1.80.