China’s leading fixed line carrier, China Telecom, has revealed that it will pay a total of $16.1bn to acquire the CDMA network of mobile operator China Unicom.

The deal is part of the Chinese government’s restructuring plan for the country’s telecoms sector, announced in May.

China Telecom will pay Rmb66.2bn to acquire the CDMA network itself and an additional Rmb43.8bn for the subscribers and related operations. The operator will launch commercial trial services in October.

Ovum analyst Charice Wang said that the new entity will most likely start offering 3G services in March 2009, giving China Telecom a first to market advantage to launch 3G services or even FMC service bundles in China.

However, CW Cheung, a consulting director for Ovum based in Hong Kong, said China Telecom will face considerable challenges in three areas: product development and service offerings; customer segmentation and market positioning; and customer service transformation – the shift from fixed location to on the move customer care.

However, Ovum believes that China Telecom should be optimistic and its goals suggest that it is. The carrier aims to have 100 million CDMA subscribers and an increased market share of 15 per cent in the next three years. It also plans to spend Rmb80bn to upgrade its CDMA network with better coverage and quality as well as an upgrade to 3G.