Lawsuit Hangs over China Unicom
Wednesday, May 31, 2000
TELECOMS
DAVID EVANS
The mainland's second-biggest telecommunications carrier, China Unicom, could face legal action from a disgruntled paging service provider who entered into a financing arrangement with sister company Unicom Paging.
Hong Kong Lark Telecom signed a China-China-foreign (CCF) agreement with Unicom Paging - a subsidiary of state-owned China United Telecommunications Corp - in 1996, to supply a paging service to 15 mainland cities.
However, last July, Beijing authorities ruled that all CCF agreements, which gave foreign companies back-door access to the mainland's telecoms market - were invalid, and all such deals should be rectified or terminated.
Don Meyer, a director with Lark Telecom, believes Unicom Paging has reneged on the agreement, which would have allowed exclusive access to eight mainland provinces.
He said the decision by mainland authorities to inject Guoxin, which operates a nationwide paging business, into China Unicom effectively broke that agreement.
"Our view is that it is inconsistent because the contracts we entered into provide exclusivity," Mr Meyer said.
According to Mr Meyer, during a meeting in Beijing on May 10, China United were informed verbally that they, Unicom Paging, or China Unicom - the mainland's No 2 telecoms carrier - could face legal action.
"Our lawyers are looking at who the respondents would be," he said.
An industry source said as the directive to cancel the CCF agreements came from central government, from a legal perspective, Lark Telecom "would not have a leg to stand on".
The source said the threat would have no bearing on China Unicom's New York trading debut on June 21, with trading in Hong Kong expected the following day.
A spokesman for co-sponsor Morgan Stanley Dean Witter said the investment bank was unable to comment on details of China Unicom's initial public offering.
technologypost.com
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I hope China Unicom didn't overplay its hand.
Ibexx |
