CHINA pressed ahead with a restructuring of the world's largest telecoms industry yesterday as Chinese telecommunications carriers announced details of two mega-deals, with a combined transaction volume of more than 500 billion yuan (US$72 billion).

The country's biggest fixed-line phone operator, China Telecommunications Corp (China Telecom Group) and its listed subsidiary (China Telecom) will pay 110 billion yuan in cash to purchase China Unicom Ltd's CDMA (code division multiple access) network asset and business.

Separately, China Unicom's GSM (global system of mobile communications) business will be merged with the country's No. 2 fixed-line phone operator China Netcom Group Corp (Hong Kong) Ltd through a share swap valued at HK$439.17 billion (US$56.28 billion), the HK-listed carriers said yesterday.

"The merger between China Unicom and China Netcom combines resources and strengthens the ability to achieve economies of scale and allows us to provide full-service operation to consumers," said Chang Xiaobing, China Unicom's chairman and chief executive.

The immediate acquisition of an existing mobile operator (CDMA business) is critical to China Telecom's successful entry into the fast-growing portable devices market, according to Wang Xiaochu, China Telecom's chairman and CEO.

"The whole reorganization process is expected to be finished in a year or longer and it will change the domestic telecommunications landscape forever," said Wang Guoping, Galaxy Securities' telecommunications analyst.

The reorganization will make the market more transparent and fair and hasten the process of issuing licenses for third-generation, or 3G, services, said the Ministry of Industry and Information.

After the revamp, China will have three large telecommunications carriers - China Mobile (with merged China Tietong's fixed-line network), China Unicom (GSM and China Netcom's business) and China Telecom (with purchased CDMA business).

The long-awaited 3G licenses will be issued after the reorganization is complete, the information ministry said.

China Telecom Group paid 66.2 billion yuan to buy China Unicom's CDMA network and China Telecom paid 43.8 billion yuan for CDMA's business and subscriber resource.

Each China Netcom share will be exchanged for 1.508 shares of China Unicom in the Hong Kong market. Each American Depository Share of China Netcom will be exchanged for 3.016 American Depository Shares of China Unicom.

China International Capital Corporation, JPMorgan Securities (Asia Pacific) Ltd and Lehman Brothers Asia Ltd acted as financial advisers for the deals.

HK-listed China Mobile jumped 2.53 percent to HK$117.60 yesterday compared to above HK$130 a week ago.

It will face asymmetric regulations from government such as enforcing a mobile market share ceiling (now 68 percent) and asymmetric mobile number portability.

The mergers will boost the carriers' spending on networks, a big plus for telecom equipment makers.