China Phone Carriers Put $36 Billion of Assets Into New Firmby
China Mobile will be biggest shareholder with 38% stake
Deal is part of government reform of state-owned enterprises
China reorganized its wireless industry Wednesday by injecting 231.4 billion yuan ($36 billion) of network assets such as base stations into a new company controlled by the nation’s carriers.
China Tower Corp. will be 38 percent owned by market leader China Mobile Ltd., according to a statement. Smaller rivals China Unicom (Hong Kong) Ltd. and China Telecom Corp. will each have about 28 percent.
Restructuring ownership of the network assets is part of a revamp involving China Reform Holdings Corp. for state-owned enterprises. The nation’s carriers have come under pressure as customers increasingly switch to using mobile messaging tools such as Tencent Holdings Ltd.’s WeChat service.
“This seems to be a fairly logical, sensible reform step,” Tony Hann, head of equities at Blackfriars Asset Management Ltd. in London, said by phone Wednesday. “It doesn’t make much sense for the three telecom companies to duplicate, since they’re all effectively state-owned anyways. Having a tower company will force them to share their assets.”
Beijing-based China Reform will own about 6 percent of China Tower, it said in a statement announcing the deal on its website. The statement didn’t specify the amount of the deal, yet the state-run Xinhua News Agency said the assets were valued at 231.4 billion yuan.
China Reform’s investment would help China Tower pay for building a network of electric-car charging stations, people familiar with the matter said this month. The government wants to boost availability of the facilities to spur adoption of the vehicles, and it assigned state-owned China Tower to build out the network because it already has a nationwide footprint with its telecommunications assets, the people said.
President Xi Jinping’s administration is seeking to overhaul China’s bloated $16 trillion state sector as the world’s second-largest economy heads for its slowest growth in a quarter century. China Mobile and its two smaller rivals announced plans last year to create China Tower by pooling assets and reducing duplication as the country rolls out faster networks.
China Reform was set up in 2010 by China’s State-owned Assets Supervision and Administration Commission, an arm of the Cabinet that controls the biggest government enterprises. It agreed last year to help restructure the coal-to-chemical business of Chinese electricity producer Datang International Power Generation Co.