In November 2015, the Company, through its wholly-owned subsidiary China Mobile Tietong Company Limited, entered into an acquisition agreement with China TieTong Telecommunications Corporation (“TieTong”) to acquire certain assets and businesses of TieTong at a final consideration of RMB31.967 billion.
The acquisition enabled us to obtain a wireline broadband license and accelerated the implementation of our full-service strategy that enhanced our competitive strength. Apart from seizing the opportunity to tap into the wireline broadband market and reap the benefits from the growth in digitally enabled families, we were able to expand our customer base and improve customer retention by bundling wireline and mobile services. The acquisition boasted significant strategic value for its providing us with immediate scale through complementary network assets, thus creating synergy in increasing our network capabilities, coverage and efficiency with an integrated network.
For more details about the acquisition, please click here.
In October 2015, China Mobile Communication Company Limited (“CMC”), a wholly-owned subsidiary of the Company, transferred its existing telecommunications towers and related assets to China Tower Corporation Limited (“China Tower”) on an arm’s length basis at a final consideration of RMB102.736 billion. Pursuant to the transaction agreement, China Tower has issued 45.151 billion consideration shares to CMC at an issue price of RMB1 per share, and a cash consideration of RMB57.585 billion shall also be payable to CMC. Of the cash consideration, the first RMB5 billion was paid on 25 February 2016, while the remaining RMB52.585 billion will be paid before 31 December 2017 with an interest rate of 3.92% per annum to be charged. The transaction generated a one-off gain of RMB10.096 billion.
Upon the completion of the transaction, CMC has become the single largest shareholder of China Tower with 38.0% equity interests. China Tower’s centralized construction and operation of telecommunications towers resources would enable us to obtain more network infrastructure resources through co-construction and sharing, and to save our capital expenditure. In addition, as one of the major shareholders of China Tower, we expect to benefit from China Tower’s future earnings and value enhancement.
For more details about the transaction, please click here.