China Unicom splashes $1.9B on fixed-line network

Chinese carrier is purchasing its parent company's fixed-line infrastructure to save on future lease fees, and improve operational and management efficiency.

China Unicom Hong Kong has agreed to pay 12.2 billion yuan (US$1.95 billion) to acquire its parent company Unicom New Horizon Telecommunication's fixed-line infrastructure.

According to South China Morning Post (SCMP) Thursday, the operator said in a filing with the Hong Kong Stock Exchange that the transaction was being pursued because its network lease agreement with Unicom New Horizon Telecommunication would expire on Dec. 31, 2012.

The deal could bring an estimated savings on future network lease fees which are expected to "exceed the incremental depreciation, amortisation and financial costs arising from the proposed acquisition", the company stated, adding the deal is scheduled to close by end-December.

It would also help China Unicom Hong Kong increase its earnings and "be conducive to increasing the long-term value" for its shareholders. Operational and management efficiency will improve since the fixed-line telecommunications network assets and business would be included in the carrier's planning.

China Unicom is not the only operator looking to enhance its network capabilities. Local competitor China Telecom had earlier announced its intention to buy the 3G assets of its parent company China Telecommunications Corp for 120 billion yuan (US$19 billion) , which would boost its operating efficiency and reduce expenses.



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