China Mobile (Hong Kong) will write down about HK$242 billion on the goodwill from its HK$256.02 billion mega acquisition of seven provincial networks from its parent, according to the company's share-offering document. The writedown represents the difference between the purchase price and the estimated fair value of the seven networks' underlying net assets. It is the largest writedown in goodwill of any acquisition in Asia. China Mobile's acquisition surpasses Pacific Century CyberWorks' merger with the SAR's dominant telecommunications operator Cable & Wireless HKT in terms of acquisition size and goodwill writedown. CyberWorks' finance director David Prince has said the combined entity would substantially write down HK$212 billion of HKT goodwill resulting from the merger. Last Wednesday, China Mobile announced it would pay HK$256.02 billion to acquire seven provincial networks - Beijing, Shanghai, Tianjin, Shandong, Hebei, Liaoning and Guangxi - from China Mobile Communications. The deal is bigger than the takeover by Pacific Century CyberWorks of C&W HKT, which went through at US$28 billion in August, though it was worth as much as US$38 billion when it was announced in February. After the writedown of goodwill, China Mobile's net asset value would increase only slightly to HK$68.72 billion from HK$61.51 billion. Total liability would more than double to 75.75 billion yuan (about HK$70.9 billion) from 33.23 billion yuan, according to China Mobile's preliminary share and bond issue document filed with the Securities Exchange Commission. Shares in China Mobile eased 25 HK cents to close at HK$55.50 yesterday. However, analysts said yesterday the substantial writedown on goodwill from the pending acquisition of the seven networks would have little impact on China Mobile's financial position. The acquisition would lift China Mobile's pro forma net profit 38.8 per cent to HK$11.31 billion, according to the document. The acquisition would also lift China Mobile's subscriber base to 39.3 million from 23.9 million as of September 20, representing a market share of about 55.9 per cent of the mainland's mobile-phone users. Meanwhile, China Mobile intends to issue about one billion new shares at an indicative price of HK$51 to raise US$6.57 billion in cash to finance part of the acquisition price. China Mobile will launch its US$6.57 billion share offering and US$600 million convertible bond offering next week. The company is expected to price its offerings by the end of this month. China International Capital Corporation, Goldman Sachs (Asia) and Merrill Lynch & Co are the global co-ordinators of China Mobile's share and bond offerings.