China Telecom to buy out Beijing unit for RMB 5.56 bln

China Telecom<728>, the nation's largest fixed-line service operator, said it plans to buy out Beijing Telecom from state-owned parent China Telecom Group for RMB 5.56 (US$792.3 million).

The acquisition is not related to the planned domestic telecom industry's reshuffle, said Chairman and CEO Wang Xiaochu. He believed the deal can help China Telecom enhance its overall competitiveness and benefit from increased telecoms demand during the Beijing Olympic Games, which will be held this August.

Beijing Telecom saw net profit soared to RMB 470 million in 2007, up 46.4% from a year earlier. Its book value climbed to RMB 4.33 billion by the end of last year.

Analysts said the acquisition will help boost China Telecom's earnings from the pressure of decreasing number of fixed-line phone subscribers.