CHINA Unicom Ltd, the country's second-biggest wireless carrier, rose in Hong Kong trading after its shareholders approved the company's plan to buy China Netcom Group Corp.

Unicom added 0.5 percent to close at HK$10 (US$1.28), after earlier rising as much 12 percent, while Netcom shares were unchanged. The benchmark Hang Seng Index fell 3.6 percent.

The combined company will boost spending to expand coverage to gain share in China, the world's biggest phone market. The proposed US$13.2 billion stock-only transaction between Unicom and Netcom is part of a government plan to let carriers offer both fixed-line and wireless services and create competition for China Mobile Ltd, the world's largest phone operator by users.

"The new company has a lot of catching up to do, and the increase in capital spending will enable them to make a start," said Steven Liu, who rates Unicom shares "hold" at DBS Vickers Ltd in Hong Kong. "The shareholders' meeting yesterday (Tuesday) has allowed the industry restructuring plan to move forward."

More than 99 percent of Unicom's shareholders on Tuesday accepted its plan to issue 1.508 shares for each of Netcom's to buy the country's second-biggest fixed-line carrier.

The deal, valued at HK$102.4 billion, based on Tuesday's share prices, is pending approval by Netcom shareholders, who will due to vote on the transaction yesterday in Hong Kong, Bloomberg News said.

Unicom stockholders also approved the Beijing-based carrier's plan to sell the smaller of its two mobile-phone units to China Telecom Corp for 43.8 billion yuan (US$6.4 billion).

The transactions are part of a government reorganization proposal, first disclosed in May, to merge smaller carriers. Three licenses for third-generation wireless services will be issued after the revamp is completed, the government said.