China Telecom to buy 6 units from parent--source

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Last updated at: (Beijing Time) Friday, October 24, 2003

China Telecom to buy 6 units from parent--source

China Telecom Corp Ltd, a unit of China's largest fixed-line phone company, plans to buy six provincial networks from its parent for roughly US$5 billion, plus debt, a banking source said on Friday.

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China Telecom Corp Ltd, a unit of China's largest fixed-line phone company, plans to buy six provincial networks from its parent for roughly US$5 billion, plus debt, a banking source said on Friday.

The Hong Kong-listed firm, which has been in talks with its state-owned parent over the acquisition since July, is expected to make an announcement regarding the deal on Monday.

China Telecom could pay about US$5 billion for the networks, and also take on US$4 billion of debt, the source said.

The acquisition would probably boost the firm's per-share earnings by 20 percent, the source said. There will be no goodwill amortisation on the deal as it will be a merger under international accounting standards.

China Telecom's earnings per share are expected at HK$0.23 this year, according to Reuters Research.

The company, which went public late last year, said at the time of listing it would consider buying provincial networks from its parent six months after the IPO.

China Telecom is planning to buy networks in Anhui, Fujian, Jiangxi, Guangxi and Sichuan provinces, as well as in the city of Chongqing.

The listed company now includes networks in three provinces and the city of Shanghai.

China Telecom's Hong Kong-listed shares fell 1.1 percent to HK$2.25 in Friday morning trade. They had gained about 14 percent in the three months up to Thursday's close.

It is being represented in the deal by investment banks Morgan Stanley and China International Capital Corp (CICC).

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