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Rumor: SASAC to Subsidize China Telecom CDMA Purchase

Sohu IT, 6/03/08

China Telecom (NYSE: CHA; 0728.HK) chairman and CEO Wang Xiaochu has admitted that the purchase of China Unicom's (NYSE: CHU; 0762.HK; 600050.SH) CDMA network will initially have a negative impact on the company's performance, with the first year or two set to present challenges and require significant investment. Wang said China Telecom has set a target of CDMA profitability by 2012. The operator is currently in talks with a number of firms regarding strategic investments, and is considering a return to the A-share market at the appropriate time.

China Telecom CFO Wu Andi indicated that China Telecom is planning a bond issue in order to raise the funds to purchase the CDMA network.

According to rumors, the State-Owned Assets Supervision and Administration Commission (SASAC) is set to provide RMB 30 - 50 bln of financial assistance to China Telecom due to the high cost of the network - which was agreed to in order to push the deal through.

Keywords: funding subsidy government support restructuring 0728.HK 0762.HK 2012 600050.SH A-share CDMA CHA China Telecom China Unicom CHU network SASAC telecom Wang Xiaochu Wu Andi wireless

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