China Telecom to purchase 3G assets in $19bn deal

The carrier plans to purchase its parent company's 3G assets to offset rising costs.

China Telecom, the smallest of the country's three carriers, is planning to buy a number of its parent company's 3G assets, according to Reuters.

china telecom deal 3g assets

The deal would strike out at over 120 billion yuan ($19 billion). Citing two unnamed sources, the publication reports that this amount surpasses their combined book value. The Hong-Kong carrier hopes to complete the acquisition by the end of this year.

Currently, China Telecom leases 3G bandwidth, spectrum and infrastructure from parent company China Telecom Corp, but acquiring these assets would cut down costs in the long-term, which would exchange rental for ownership.

As mobile technology continues to enjoy expanding growth, subscriber numbers are rising exponentially -- which in turn has resulted in high leasing fees. Last year, China Telecom paid 19 billion yuan ($2.99 billion) for the service. The company currently clams 144 million mobile subscribers, including over 50 million 3G subscribers.

One of Bloomberg's sources, anonymous due to being unauthorized to talk to the media, said that "the amount won't be below the book value of the assets."

China Telecom will be relying on its own financial resources to complete the acquisition. No new share offerings are currently planned. The carrier's intentions concerning the deal are to to be released later this month.

Recently, a hacker group Swagg Security placed China Telecom into the spotlight by claiming it breached the firm's databases and published over 9000 login details of its administrators -- Warner Bros being one of the victims.