New China Unicom May Spend RMB 100B Per Year On 3G Expansion

China Unicom Limited announced more details regarding its proposed acquisition of China Netcom on Wednesday. At the completion of the merger, expected to be October 15, China Netcom will become a wholly-owned subsidiary of China Unicom with Netcom BVI, the immediate controlling shareholder of China Netcom, taking approximately 29% stake in China Unicom. The resulting company will be renamed China Unicom (Hong Kong) Limited.

The merged company, with its anticipated 3G license, may see wireless capital expenditure reach RMB 100 billion in 2009 and 2010. Existing annual caps for China Unicom subsidiary China Unicom Corporation Limited to spend on equipment procurement in 2008 and 2009 are RMB 75 million and RMB 95 million, respectively.

The agreement details new continuing connected transactions including engineering and information technology services agreement with proposed maximum spending of RMB 4.4 billion for each of the three years between 2008 and 2010 and a support services agreement capped at RMB 1.5 billion for each of three years.

China Netcom may spend as much as RMB 15 billion on the replacement of copper cables with fiber optics within the next three to five years.

Lisa