China Unicom last night unveiled the long-expected acquisition of nine mobile networks from its parent for 22.5 billion yuan (about HK$21.08 billion). The mainland's No 2 mobile carrier will pay 4.8 billion yuan in cash and assume 17.7 billion yuan of debt to acquire GSM networks in eight provinces and one city. The price represents 10.4 times this year's earnings and a prospective price-earnings ratio of 7.4 times. That is a deep discount to China Unicom's current market valuation of 16.1 times this year's earnings and 15.9 times next year's estimated earnings. China Unicom forecasts the nine networks will generate profit of about 460 million yuan in the year to December, rising by 41.3 per cent to 650 million yuan next year. The networks are in Heilongjiang and Jilin provinces in China's northeast; Henan and Shaanxi in the north; Jiangxi and Guangxi in the south; Sichuan and the city of Chongqing in the southwest and Xinjiang in the far west. Details of the acquisition came as China Unicom unveiled October subscriber figures that show the company's efforts to build up its code division multiple access (CDMA) network are continuing to eat into the growth of its GSM operation. The carrier added 685,000 CDMA subscribers, up from 591,000 new users signed up in September. However, its GSM subscriber growth slowed to only 952,000 new users against a recent monthly average of one million. Rival China Mobile added 2.15 million GSM users to take its subscriber base to 113.59 million.
