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Unicom snapping up nine networks
By Alex Frew McMillan
HONG KONG, China (CNN) -- Mobile-phone company China Unicom plans to buy nine cellular networks from its parent by the end of the year for around $2.75 billion. The mainland's No. 2 cell-phone service plans to acquire the operations to boost profitability. It currently has networks in 12 of China's richest provinces. Unicom already announced that it ultimately plans to buy all 18 of its parent's province-wide networks. But the South China Morning Post said Friday it will buy the nine networks at a 30 percent discount to its current stock price. The company is paying 5 billion yuan in cash and taking on almost 20 billion yuan in debt, for a total price of around 23 billion yuan ($2.78 billion), Reuters news agency stated, citing bankers involved in the deal. A total of 15 million customersWith a cash balance of 24 billion yuan as of June, Unicom would not need to go back to the capital markets to raise money for the networks. The networks, in Chongqing, Guangxi, Heilongjiang, Henan, Jiangxi, Jilin, Shaanxi, Sichuan and Xinjiang provinces, total 15 million subscribers in all. Also included is the mobile-phone system in the huge city of Chongqing. China Unicom currently has 41.4 million subscribers in the 12 provincial networks it already owns. So the move would boost its customer base 36 percent. Shares in China Unicom have raced ahead on the deal. They closed up 6.31 percent at HK$5.90, outperforming the Hang Seng's gain of 1.28 percent, extending Thursday's 4.72 percent run. Friday's leap was in stark contrast to former monopoly China Telecom, which saw its initial public offering fizzle with a 2.04 percent fall to HK$1.44. (Full story) China Telecom had already pushed back its offering and cut its size by more than half due to weak demand.
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