Chairman and chief executive of China Telecom Corp. Ltd. Wang Xiaochu speaks during a news conference in Hong Kong. (Photo : Reuters)
As part of China's efforts to reform the world's largest mobile market, the country's top three telecom carriers will sell their tower assets, in cash and in stock, to a newly formed joint venture.
Last year, China Mobile Ltd., China Unicom (Hong Kong) Ltd. and China Telecom Corp. formed the venture China Tower Corp.
After the news of the three's plan to transfer their towers and assets, the shares of each firm in the Hong Kong trade increased.
According to analysts, the selling will have a valuation of 214 billion yuan. After the transfer is finished, each carrier will have to pay a leasing fee for using the telecom towers.
China's top carriers stated that the joint venture will boost the quality of network coverage, and will help save capital expenditure for telecom tower construction projects.
The telecom tower is where the equipment for mobile network is housed.
Nonetheless, for experts, the reform will be less advantageous to China Mobile as the other two, which are smaller players, can now potentially expand their coverage by the firm's use of the telecommunication assets.
After the transaction, China Mobile will have a 38-percent share, while China Unicom and China Telecom will have 28.1 percent and 27.9 percent, respectively.
Leping Huang, a Nomura analyst, said that the reform will boost China Mobile's earnings by 15 percent, China Unicom's by 43 percent, and China Telecom's by 8 percent.
The firms are expected to complete the transaction by the end of the month.
