China United Telecommunications Corp.'s (China Unicom) (NYSE:CHU) CDMA business has been sold to China Telecommunications Corp. (China Telecom) (NYSE:CHA) for RMB 110 billion ($15.85 billion), according to announcements made today by the companies' respective listed arms, China Unicom Ltd and China Telecom Corp. Ltd.
The deal was divided into the sale of CDMA services and the sale of CDMA infrastructure.
An agreement to sell China Unicom's CDMA services for RMB 43.8 billion ($6.31 billion) was signed between China Unicom (NYSE:HK), China Unicom Corp. Ltd. - its wholly-owned subsidiary that operates its CDMA services - and China Telecom (HK). The latter will pay in three installments. The first, for 70 percent of the amount, will be paid in cash. The second installment will make up 20 percent of the amount, and the final installment, 10 percent. All payments will be made before March 31, 2009.
According to China Telecom (HK)'s announcement, the CDMA service agreement means it will immediately gain entry into the fast-growing and profitable CDMA business on a national scale. The CDMA business will allow it to offer full services (fixed-line, mobile, data and media) to its customers, and provides a solid foundation to build and develop the next generation of mobile business and services, the company said.
Meanwhile, China Unicom, its wholly owned subsidiary Unicom New Horizon Mobile Telecommunications Co. Ltd. and China Telecom agreed that China Telecom would purchase the CDMA network infrastructure for RMB 66.2 billion ($9.54 billion), following the same installment process as the CDMA services sale.
According to China Unicom (HK) and China Telecom (HK), sales of their H-Shares, which have been suspended since May 23, will resume today. Sales of their American depository shares on the New York Stock Exchange, which were also suspended on May 23, will resume today as well.