China's big three sign lease deals with China Tower

13 Jul 2016
Daily News

China's big three telcos have each settled on five-year lease agreements with infrastructure-sharing joint venture China Tower.

China Mobile, China Telecom and China Unicom have filed stock exchange disclosures detailing the terms of the agreements, which are expected to generate significant long-term savings.

South China Morning Postreports that China Tower has agreed to a slightly lower rate compared to the deal the operators have been working under since November.

The operators are paying an average site lease fee of roughly 26,000 yuan ($2,890) per tower, with discounts for when two or three operators lease the same tower.

The report states that analysts have calculated that China Mobile, Unicom and China Telecom will generate savings this year of 2.4 billion yuan, 1.9 billion yuan and 1.8 billion yuan, respectively, leading to ebitda increases of 1-2%.

In October last year, the three operators agreed to transfer a combined $36 billion worth of towers and related assets to China tower in exchange for shares in the company. China Mobile secured a 38% stake in the joint venture while China Telecom and Unicom each secured around 28%.

China Tower is expected to conduct a public listing in late 2017 or early 2018, but the lower rental fee agreements could impact its profitability and hence its valuation, the report states.

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