China’s ‘Big Three’ network operators inject 214 billion yuan assets into telecoms tower venture

The mainland’s “Big Three” telecommunications network operators have agreed to sell and transfer assets worth a combined 214 billion yuan  to their ambitious infrastructure-sharing joint venture, China Tower Corp.

That massive asset infusion is expected to advance the joint venture’s goal of reducing duplication and redundant construction of telecommunications towers and related infrastructure in the world’s second-largest economy, according to separate regulatory filings on Wednesday night by China Mobile, China Unicom and China Telecom.

Analysts said on Wednesday that the transaction would provide a one-time gain for each operator’s earnings this year and serve as a positive catalyst for their valuations.

All three operators are to sell their assets at appraised values “which represent premiums to book values of 20 per cent for China Mobile, 18.1 per cent for Unicom and 17.6 per cent for China Telecom”, Anand Ramachandran, the head of Barclays’ telecommunications, internet and media equity research for Asia, excluding Japan, said in a report.

Barclays estimated a total of 1.5 million towers, along with related assets like plant rooms and ancillary equipment, were involved in the transaction, which will be paid for by China Tower in shares and cash. None of the three operators have disclosed the number of towers they own, so analysts’ estimates have varied.

Once their asset disposals are completed, China Mobile’s stake in China Tower will be at 38 per cent, Unicom’s 28.1 per cent and China Telecom’s 27.9 per cent.