China Unicom to Acquire China Netcom

The deal is worth almost $24 billion.
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Chinese wireless provider

China Unicom

(CHU) - Get Report

said Monday it will acquire fixed-line services company

China Netcom

(CN) - Get Report

as part of the first step in the country's reshuffling of its telecom shops.

The nearly $24 billion stock-swap deal comes one week after Chinese officials announced a plan to merge six state-owned phone providers into three in a move designed to offer more competition for

China Mobile

(CHL) - Get Report

, which has the largest subscriber count in the world at nearly 400 million.

"The merger between Unicom and Netcom is in line with the industry trend of convergence between fixed-line and wireless businesses," said China Unicom in a statement. "Unicom management believes that the restructuring will be a new starting point for Unicom's development in the future."

China Watch: Telecom Revamp Explained

var config = new Array(); config<BRACKET>"videoId"</BRACKET> = 1577985292; config<BRACKET>"playerTag"</BRACKET> = "TSCM Embedded Video Player"; config<BRACKET>"autoStart"</BRACKET> = false; config<BRACKET>"preloadBackColor"</BRACKET> = "#FFFFFF"; config<BRACKET>"useOverlayMenu"</BRACKET> = "false"; config<BRACKET>"width"</BRACKET> = 265; config<BRACKET>"height"</BRACKET> = 255; config<BRACKET>"playerId"</BRACKET> = 1243645856; createExperience(config, 8);

Additionally, China Unicom said it will sell its code division multiple access, or CDMA, network to

China Telecom

(CHA) - Get Report

for $15.86 billion. China Unicom said the sale of CDMA business "is expected to help clarify Unicom's business focus in the future and facilitate the smooth transfer of

global system for mobile communications to 3G by consolidating resources."

Once the restructuring is complete, three 3G spectrum licenses will be granted to the merged companies. China Telecom will use a CDMA network, while a merged China Unicom and China Netcom is expected to build out a 3G network based on wideband code division multiple access, or WCDMA, technology. China Mobile would be committed to operating a time division synchronous code division multiple access, or TD-SCDMA, network.

Shares of China Unicom, China Netcom, and China Telecom have been suspended from trading since May 23, ahead of the restructuring announcement. China Mobile, meanwhile, has lost nearly 10% over the last week.