80 billion China Telecom plans to issue bonds may be used for 3G operation

April 10th, China Telecom issued short-term financing bonds, the amount of 20 billion yuan, only half a year away from the last bond. According to the reporter, this is only part of the total amount of up to 80 billion yuan in the bond issuance plan.

80 billion bond plan appeared

Reporter obtained a copy of the prospectus shows that the China Telecom this year the first phase of short-term financing bonds issuance date for April 10th, the total amount of 20 billion yuan, by the China Telecom listed in Hongkong red chip company as publisher, will be held on April 12th in the inter-bank bond market circulation.

Not only that, the reporter found in the China Telecom issued notice of the general meeting of the red chip companies, the China Telecom plans to issue bonds is very large. In the end of October this year, the issuance of short-term financing bonds amounting to 30 billion yuan. This means that, after the issuance of the 20 billion yuan in April bonds, China Telecom in half a year there are still $10 billion debt limit.

At the end of October this year to the first half of next year this time, the China Telecom also plans to issue short-term financing bills in a batch or batch form, the amount of 40 billion yuan. Coupled with last October has issued 10 billion yuan of short-term financing bonds, a total amount of up to $80 billion bond issuance plan has been revealed.

Mystery of use"

China Telecom in a long period of time to raise huge amounts of debt, its use by the market. In the prospectus, China Telecom said: raise funds will be mainly used to supplement the company's working capital needs, as well as other liquidity needs."

However, the Ministry of information industry telecommunications research consultant Zuo Juan believes that the expansion of the field of mobile China Telecom is the only way. From its financial position, if it is not a large-scale investment, there is no need to issue such a financing bonds." It is worth noting that, in the prospectus, the China Telecom also suggested: fixed network business slowdown has affected the company's profit, in response to this trend, the company will "actively strive for the development of mobile communications services, the formation of a new growth point".

In fact, the upcoming 3G, the China Telecom to justifiably carry out mobile business hope. Shortly before the results of the conference, China Telecom chairman and CEO Wang Xiaochu said, the China Telecom has begun to deploy 3G investment, once the 3G licenses issued, will be at a low cost of borrowing 3G business development, and take the lead in the southeast coastal areas to provide 3G services.

The market generally believes that this year will be the start of China's 3G, the four operators will be in different forms to obtain a 3G license, and China Telecom obtained this 3G license is likely to be domestic TD-SCDMA license. If so, short-term financing bills such low-cost financing is in line with the appetite of China Telecom.

Galaxy Securities senior researcher Wang Guoping analysis, compared with 1 years of bank loans, the China Telecom issued a short-term financing bills of $20 billion, will save about 300 million yuan of interest expenses. In addition, short-term financing bonds can also be rolled out, the program is very simple."

Deal with 3G loss?

According to insiders, China Telecom, from 2003 onwards, China Telecom 3G annual investment plan, but the plan is aimed at WCDMA. Planning, evaluation of China Telecom 3G network construction cost, the main reference China Unicom's CDMA network. China Unicom construction three CDMA network invested a total of about 130 billion yuan.

Sponsored by the Institute of communications, China before the "commercial 3G base station deployment strategy consultation, Liu Shuping of vice director of Comprehensive Planning Department of the Ministry of information industry said that if the construction of 3G network and 2G network to maintain the same size, completely new words, do not consider the construction of the base station must cost only equipment spending will probably be 15 billion to 16 billion yuan.

Coincidentally, China Telecom disclosed in the 2005 earnings report, as of the end of 2005, the cash assets of 15 billion 400 million yuan, roughly the size of the scale of the new network equipment expenditures.

Deutsche Telecom consulting firm consultant Rui analysis, after obtaining 3G license, China Telecom can use its own funds to build 3G network, and the use of short-term financing bonds issued to raise funds to carry out 3G operations. "For the China Telecom, 3G operating costs will include three parts, one is to compete with other operators to reduce the bill the cost of subsidies; two is the high-end PHS users to switch network costs, including sending mobile phone; three is the marketing cost, including the construction of sales channels and expand, and pay the cost of commissions."

He said, China Telecom has certainly been aware of the initial 3G business will be a big loss, and thus the issuance of bonds to raise funds to enhance the ability to deal with risks."

Wang Guoping believes that in the four or five years after the beginning of 3G investment, this phase of investment will remain relatively stable, while income is relatively rapid growth. At that time, the operator's 3G harvest will really come."