China's telecommunications firms including China Netcom and China Unicom are
seeking capital to prepare for the next generation mobile phone technology.
China Netcom, the country's second biggest fixed-line phone operator, will
start a 10 billion (US$1.25 billion) short-term bill tomorrow.
"It will give us adequate capital and the one-year bill helps us reduce the
costs of raising money," China Netcom said in a statement.
Short-term bills usually have a lower interest rate than a bank loan,
industry insiders said.
Telecommunications analysts said China Netcom's move showed its ambition to
raise enough money to build a 3G network.
Meanwhile, China Unicom launched a 6 billion yuan short-term bill at the
beginning of this month.
The central government is expected to issue 3G licenses in the fourth quarter
or the first half of next year.
Construction of a national 3G network will cost about 100 billion yuan. Most
telcoms, except China Mobile and China Telecom, are not able to establish a
network. Therefore, they have to cut costs and raise more money, according to
Norson Telecom Consulting, a Beijing-based information technology consulting
firm.
Before that, China Netcom sold its stake in Asia Netcom for US$350 million.
The company, which holds a 20 percent stake in PCCW, also showed no interest in
acquiring more PCCW shares when they were offered recently.
China is expected to issue 3G licenses to three of the four major telecom
firms - China Mobile, China Unicom, China Telecom and China Netcom.
"Competition will further escalate if more mobile licenses are awarded, thus
leading to possible changes in the market share and the financial profiles of
the existing operators," research firm Fitch Ratings said in a recent report.
Chinese telecom carriers need to invest at least 36.6 billion yuan during the
initial stage of 3G, according to Norson Telecom.
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