ChinaTel already owns networks in six mainland provinces, and the addition of seven would possibly be the company's largest acquisition. Although the company declined to discuss price, one analyst said it could be as high as US$19 billion.
ChinaTel wants to acquire networks in Beijing, Tianjin, Shanghai, Liaoning, Hebei, Shandong and Guangxi, increasing its increase its subscriber base 60 percent, from 20.05 million to about 32 million.
"It seems that ChinaTel wants to speed up its expansion before China's entry into the WTO to make sure they are always in the leading position," an analyst at SG Securities (HK) Ltd Philip Mok said.
Certainly, ChinaTel has reasons to rush the new acquisitions. China Telecommunications Corp, which operates China's largest fixed network, China Netcom and Jitong Telecom all want to tap the equity market within one to two years. The sooner ChinaTel completes the acquisition of the networks, the easier the financing will be.
Mok estimates the price tag for the seven networks would be about US$19 billion, based on a discount to the US$10,065 per subscriber price paid by France Telecom to acquire Orange Plc. At that price, the cost of the seven networks would be almost four times the amount China Unicom raised from the market in its recent IPO.
ChinaTel bought three provincial mobile phone networks from its parent last October for US$6.4 billion, financing the purchase with US$5.6 billion of new shares and US$500 million in bonds.
ChinaTel shares rose as much as 1.9 percent, or HK$1.25 (S$0.28), to HK$15.25 (S$3.39) today, while its major rival, China Unicom Ltd, fell as much as 1.6 percent to HK$15.60 (S$3.47).
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