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China Netcom Raises US$325m in Private Placement
China Netcom Corp Ltd, one of China's six licensed telecoms carriers, said Monday that it raised US$325 million from private investors including US investment bank Goldman Sachs and Rupert Murdoch's News Corp.
In what the company called the first direct investment in a Chinese telecoms firm by international investors, China Netcom gave up 12 percent of its equity to investors that also included state-owned banks Bank of China and China Construction Bank, the company said in a statement.
Chief executive Edward Tian said in the statement that the investment had the support of industry regulators in China.
"The event signifies a further opening up of China's telecom industry," Tian said.
Beijing-based China Netcom is one of a handful of telecoms firms in China that offers Internet Protocol (IP) telephony services -- which uses the Internet and other networks rather than traditional copper wire technology to carry voice traffic.
While IP telephony currently accounts for less than 10 percent of international phone calls, regulators in China encourage the technology as a cheaper alternative to traditional lines for long-distance calling, and most analysts see IP telephony being used for all international phone traffic in five years' time.
The Ministry of Information Industry (MII), China's telecoms regulator, last December halved IP telephony rates.
An attempt in the mid-1990's by rival telecoms operator China Unicom Group, the parent company of Hong Kong-listed China Unicom Ltd, to secure private foreign investment under the China-China-Foreign (CCF) scheme resulted in a controversial forced divestment by regulators in 1998.
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