China Unicom, HK CCT Telecom In Deal To
End JV - Report
BEIJING -- China United Telecommunications, or Unicom, the country's
No. 2 telecommunications company, has reached a preliminary deal with a
Hong Kong investor to end a now-disallowed joint venture, a local
newspaper reported Tuesday.
Under the agreement, Unicom will give CCT Telecom Holdings Ltd.
(H.CTL) as much as 1 billion yuan ($1=CNY8.28) in cash and a portion of
its equity in exchange for CCT Telecom's interests in two now-defunct joint
ventures, said the semi-official China Business Times, citing unidentified
company sources.
Unicom officials declined to confirm or deny the deal, which will eliminate a
significant hurdle to long-delayed listing plans and could set a pattern for
similar deals with other former foreign partners.
Tuesday's report follows talk in recent days that Unicom has nearly finalized
a separate deal with U.S.-based Qualcomm Inc. (QCOM). That deal will
let Unicom push ahead with mobile telecom networks that use Qualcomm's
CDMA technology.
Unicom's deal with CCT Telecom sets terms for how the Hong Kong
company will divest itself from joint ventures it funded by routing capital
through third, nominally Chinese, joint ventures it had in China. Dozens of
foreign companies had used the same roundabout method to circumvent
government restrictions on direct foreign investment in mainland telecom
services companies.
But the government cracked down on the so-called "China-China-foreign"
joint ventures with Unicom late 1998. Ensuing legal wrangles with
disgruntled foreign partners, who had plowed over $1 billion into the deals,
have forced Unicom to delay a listing in Hong Kong that had been planned
for October last year.
CCT Telecom's original investment of about CNY600 million bought it a
30% stake in Shanghai Unicom and a 60% stake in Shanxi Unicom in
northern China, the China Business Times said.
If the agreement is finalized, CCT Telecom will get more than that in return
for those stakes, including between CNY800 million and CNY1 billion in
cash, as well as an unspecified number of shares in Unicom after the
company lists, the report said.
-By Jason Dean; 8610 6532-6652; jason.dean@dowjones.com
Briefing Book for: H.CTL |
