China Netcom Group Corp (Hong Kong) is to announce today the acquisition of fixed-line telecommunications network operations in four provinces from parent China Network Communications Group Corp, according to chief executive Edward Tian Suning. The acquisition would be funded by cash and a 'delayed payment' to its parent company, Mr Tian said in Beijing over the weekend. 'There will be no equity issuance in the transaction,' he said. 'The deal will be announced [today when] we will also release our interim results.' The four provincial networks are in Jilin and Heilongjiang in northeast China, and Shanxi and Inner Mongolia in the north. They comprised fixed-line telephony and broadband internet operations, Mr Tian said. He declined to disclose the transaction value, the customer numbers and financial figures of the networks. But he said they were all profitable in May. China International Capital Corp, Citigroup and Goldman Sachs were appointed to conduct a valuation on the networks for the connected transaction that was first announced in April. The four telecommunications networks will add to the company's existing networks in the provinces of Hebei, Shandong, Liaoning and Henan and the municipalities of Beijing and Tianjin. China Netcom had 80.38 million fixed-line subscribers at the end of last year, up 15.5 per cent from 2003. Broadband users jumped 145 per cent to 6.22 million last year and increased a further two million in the first quarter. The company expected the figure to reach 20 million by the end of this year. China Netcom is the smallest of the country's four state-controlled telecommunications majors. Last year, it recorded a net profit of 9.24 billion yuan, compared with a loss of 11.11 billion yuan in the previous year. The acquisition comes amid anticipation that a consolidation of the country's telecommunications firms is imminent in order to reduce competition and duplication of infrastructure investment as China prepares to launch next-generation services.
