Shareholders yesterday gave the nod to China Unicom Ltd to take over the business of another nine provinces from its parent company -- China United Telecommunications Corp -- and to sell its paging service to its parent company.

Shareholders participating in two meetings held simultaneously yesterday in Hong Kong and Shenzhen all voted in favour of the purchasing and selling plan which was announced late last month.

According to the plan, China Unicom Ltd is to acquire the GSM (global system for mobile communications) business and assets as well as CDMA (code division multiple access) business of its parent company in nine provinces and autonomous regions.

They are Shanxi, Hunan, Hainan, Yunnan, Gangsu, Qinghai, Inner Mongolia, Ningxia Hui and Tibet.

Meanwhile, Hong Kong-listed China Unicom Ltd is to sell its paging service to its parent company.

"This will be a strategic step for our group to better take advantage of capital holdings,'' said a statement from China United Telecommunications Corp yesterday.

"The purchasing of the new networks will help our listed companies to further widen their business regions and range as well as bring more benefit to our investors,'' it said.

As a result, China Unicom Ltd is to provide service to 1.24 billion people compared to the previous 1.02 billion. Mobile subscribers will increased by 13.4 per cent to 84.99 million.

According to the parent company, the number of mobile subscribers in the nine provinces reached more than 10 million by the end of September this year.

"It's good to acquire good assets from the parent company and sell its paging service as it will greatly enhance the company's competence,'' said Dai Chunrong, an analyst with China Securities.

China Unicom Ltd announced late last month that it will spend 3.2 billion yuan (US$385 million) to purchase new networks and sell the paging service, which is worth 2.75 billion yuan (US$331 million).

"Though the move may incur a several million asset loss, it is acceptable, as the sale will help China Unicom to dump a big burden,'' she said.

Figures indicate that the paging sector suffered a loss of about 1.03 billion yuan (US$124 million) in the first nine months the year.

Analysts attributed the large shrinkage of the paging service to the fast development of mobile telecommunications and widespread use of short message service, as well as fast development of 'Xiaolingtong' wireless phone service.

According to China Unicom, by the end of last year, pager users reached more than 17.6 million. The figure was down by 46.2 per cent from the 32.9 million at the end of 2001.

Chairman Wang Jianzhou stressed later last month that profitability would be a top priority for the company, with subscriber growth as a lesser focus.

In this regard, Dai believe that the sale of the paging service will also contribute to improving average revenue per user, a widely watched industry benchmark, as the sell-out will reduce the company's loss.

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