Unicom Updates CDMA Business Disposal Agreement
China Unicom Press Release, 7/28/08
China Unicom has announced the details of the sale of its CDMA network and business to China Telecom.
Regarding the sale of its CDMA business, China Unicom Limited (NYSE: CHU; 0762.HK; 600050.SH), China Unicom Corporation Limited (CUCL) and China Telecom Corporation Limited (NYSE: CHA; 0728.HK) have entered into a CDMA Business Disposal Agreement. The total consideration remains unchanged from the previous CDMA Business Framework Agreement, with China Telecom paying a total of RMB 43.8 bln (HKD 50.1 bln) in cash, spread out over three installments, with the bulk (70%) being paid on or within 3 days of the transaction completion date, targeted to be no later than October 1, 2008. A further 20% is due within 3 days after the delivery date (60 days after the completion date), and the final 10% is due before March 31, 2009.
The list of assets China Telecom will acquire include Unicom';s CDMA subscriber-base, certain jointly used CDMA network assets, sales offices in northern China, intellectual property rights, information technology systems and networking equipment, a proportion of the staff from CUCL and the equity interest in China Unicom (Macau) Company Limited and Unicom';s handset procurement subsidiary, Unicom Huasheng Telecommunications Technology Co. Ltd.
Unicom will use the proceeds from the sale of its CDMA business to expand its GSM network, improve support systems, lay the foundation for the development of its 3G business, reduce debt and fund working capital.
Regarding the sale of its CDMA network, China United Telecommunications Corporation (Unicom';s state-owned parent) and Unicom New Horizon Mobile Telecommunications Company Limited (a wholly-owned subsidiary of China United Telecommunications Corporation) have entered into a CDMA Network Disposal Agreement with China Telecommunications Corporation (China Telecom';s state-owned parent) to sell their CDMA network assets to the latter for a consideration of RMB 66.2 bln (HKD 75.7 bln) Completion of the sale is expected to occur on the same date as completion of the sale of the CDMA business.
Once the sale has been completed, China Telecommunications Corporation will lease the CDMA network to China Telecom Corporation Limited. The maximum lease fee payable for the period commencing from the effective date of the CDMA Lease until December 31, 2008 and for the two years ending December 31, 2009 and 2010 is not to exceed RMB 4 bln (HKD 4.57 bln), RMB 20 bln (HKD 22.85 bln) and RMB 35 bln (HKD 40 bln), respectively.
Keywords: restructuring China Unicom Limited China Unicom Corporation Limited China Telecom Corporation Limited China United Telecommunications Corporation Unicom New Horizon Mobile Telecommunications Company Limited 0728.HK 0762.HK 600050.SH CDMA CHA China Telecom China Unicom CHU Unicom Huasheng Macau wireless
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