China - Beijing Telecom

China Telecom to buy Beijing Telecom

China Telecom, the nation's largest fixed-line phone company will pay 5.56 billion Yuan (£400 million) to acquire Hong-Hong listed Beijing Telecom, just in time for the 2008 Olympics.

Industry analysts predict the move is an attempt to tap into the increasing demand for broadband IPTV market during the Beijing Games this summer.

Last week, China Telecom posted a 1.7 per cent decline in fourth-quarter profit after a drop in subscribers by 2.24 million in 2007 to 220 million, as consumers turn to mobile phones instead. Full-year profit of 23.7 billion Yuan was down from a slightly revised 27.2 billion Yuan a year ago.

In 2007, China's subscriptions for mobile-phone services rose 86.2 million, while fixed lines declined by 2.3 million, according to official data. The Chinese government may allocate fixed-line companies wireless assets to increase competition after six straight months of subscriber loss to mobile services.

“Although the intensifying market competition is a serious change for us, the upcoming full services offering will bring enormous business opportunities,” said China Telecom Chairman Wang Xiaochu.

China Telecom is hoping to attract Beijing’s residents with the purchase, of which half are now online and 70 per cent are using broadband, according to data by the China Internet Network Information Centre.

If the government announces the decision to reorganise the industry, China Telecom will sell debt and shares in China to fund restructuring costs, said Chairman Wang.