China Mobile, MoR to divvy up China Railcom assets
Beijing. November 13. INTERFAX - China Mobile Communications Corp. (China Mobile) and the Ministry of Railway (MoR) have reached an agreement on the mutual division of China Railcom Group Co. Ltd.'s (China Railcom) assets, a source close to the situation told Interfax on Nov. 13.
According to the agreement, China Railcom's public telecommunications assets will be dissolved into China Mobile's fixed-line business subsidiary, while China Railcom's private railway telecommunication assets will be assumed by MoR.
The entire process should be completed by December, according to the source, who spoke on the condition of anonymity.
According to the agreement, following the MoR takeover of the railway communications assets, China Mobile will incrementally distribute China Railcom's remaining assets to its provincial subsidiaries.
No timetable has been disclosed.
China Mobile's plan to acquire China Railcom was part of the Ministry of Industry and Information Technology's (MIIT) restructuring of the telecom sector in May 2008.
Interfax reported on Nov. 6 that China Mobile had suspended the multi-phase China Railcom merger in the middle of the second phase. This was most likely due to the heavy RMB 40 billion ($5.86 billion) in debt held by China Railcom and the disposition of 70,000 China Railcom employees.
China Railcom announced on Nov. 13 that it would cooperate on the agreement made between China Mobile and the MoR.
China Mobile declined to comment on the agreement when contacted by Interfax on Nov. 13.