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Five Operators to Pay RMB 5 bln in Profits to MOF

The Beijing Times, 12/20/07

The Ministry of Finance (MOF) and the State-Owned Assets Supervision and Administration Commission (SASAC) have issued notice that China Mobile (NYSE: CHL; 0941.HK), China Telecom (NYSE: CHA; 0728.HK), China Netcom (NYSE: CN; 0906.HK), China Tietong and China Satcom are to pay a combined total of RMB 5 bln in profits to the state.

However, an RMB 130 mln payment from China Unicom (NYSE: CHU; 0762.HK; 600050.SH) is to be waived. According to a company insider this is due to the company's capital structure - Unicom is not a wholly-owned state company, but is owned 80% by the state and 20% by 14 minority shareholders. According to a China Academy of Telecommunication Research (CATR) expert, the government may have opted to hold back on collecting profits as Unicom is listed both overseas and within China and has a complex share structure.

However, another expert points out that Tietong has a similar structure, with multiple shareholders, and that the MOF and SASAC document covers stock dividends for shares in companies that are government owned in whole or in part.

LENS: In contrast with the explanations provided by both the Unicom insider and MII experts mentioned above, several industry insiders have suggested that the omission of Unicom from SASAC's SOE profit-sharing plan is a sign that SASAC plans to restructure Unicom some time in the near future.

Keywords: Ministry of Finance SASAC China Mobile CHL 0941.HK China Telecom CHA 0728.HK China Netcom CN 0906.HK China Tietong China Satcom China Unicom CHU 0762.HK 600050.SH CATR tax telecom wireless MII


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The information contained in this newsletter is based upon sources that Marbridge Consulting believes to be reliable, and we have made every effort to translate the original articles or article excerpts as faithfully as possible. However, Marbridge Consulting makes no warranty of and assumes no legal responsibility for the accuracy of either the original source material or the English language translations.

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