China Network Communications Corporation (hereinafter referred to as China Netcom) is a very large telecommunications company in China. It is the fixed communications service partner of the Beijing 2008 Olympic Games and a well-known telecommunications operator at home and abroad.
The predecessor of China Netcom has a long history of more than 100 years. On May 16, 2002, according to the "Telecommunications System Reform Plan" of the State Council, China Netcom merged with the former China Telecom Group Corporation and its 10 northern provinces (autonomous regions and municipalities) telecommunications companies, China Network Communications (Holdings) Co., Ltd., and Jitong Communications Co., Ltd. The company was established on the basis of the company.
China Netcom is a state-authorized investment institution approved by the State Council and a state-controlled pilot unit. It is directly managed by the central government and is listed separately in national finance and related plans. China Netcom has a registered capital of 60 billion yuan, and as of the end of 2003, its total assets exceeded 250 billion yuan.
China Netcom has a modern communications network that covers the whole country, has access to the world, has a reasonable structure, advanced technology, and complete functions. It mainly operates various domestic and international fixed telecommunications network facilities and related telecommunications services. As of April 2004, the total number of China Netcom's telephone users has exceeded 100 million.
Currently, China Netcom is committed to developing broadband communications, including various services represented by "Broadband China CHINA169", "Broadband Home", "Lingji eMobile" and service access number "10060" Or the service brand has become a household name.
China Netcom strives to become a first-class telecommunications company in Asia by the end of 2006. Focusing on this goal, China Netcom is deepening reforms, accelerating development, improving services, continuously improving the core competitiveness of the enterprise, and striving to make greater contributions to the sustainable development of China's communications industry.
China Netcom was established on October 22, 1999. Its purpose is to promote international investors' investment in Netcom China. Netcom China (the company's main operating subsidiary) was established in August 1999 by the Chinese Academy of Sciences, the Radio, Film and Television Information Network Center of the State Administration of Radio, Film and Television under the State Administration of Radio, Film and Television, the China Railway Communication Center, and Shanghai Lianhe Investment Co., Ltd. The company was jointly established.
On May 16, 2002, according to the "Telecommunications System Reform Plan" promulgated by the Government of the People's Republic of China, China Netcom Group owned the 10 northern provinces (autonomous regions and municipalities) under the former China Telecom Group Corporation. , autonomous region) telecommunications company. At the same time, according to the reform plan, China Netcom Group acquired all the shares of Jitong Communications Co., Ltd. on May 28, 2003. China Netcom Group is a very large state-owned communications enterprise, a state-authorized investment institution and a state-controlled pilot unit. It is listed separately in national finance and related plans.
After a series of reorganizations, initial public offerings and the full exercise of the over-allotment option in 2004, China Netcom has formed a diversified ownership structure: China Netcom Group owns 70.49% of the company through China Netcom BVI. shares; Shandong Provincial State-owned Assets Supervision and Administration Commission (hereinafter referred to as "Shandong State-owned Assets Supervision and Administration Commission") owns 2.27% of the company's shares; the Chinese Academy of Sciences, the State Administration of Radio, Film and Television's Radio, Film and Television Information Network Center under the State Administration of Radio, Film and Television, China Railway Communications Center and Shanghai Lianhe Investment Co., Ltd. each own 0.56% of the company's shares; China Netcom Fund L.P. owns 6.76% of the company's shares; overseas public investors own 18.2% of the company's shares.
Reorganization process
The Company's current main operating subsidiary, Netcom China, is a domestic limited liability company established in August 1999 by the Chinese Academy of Sciences and the State Administration of Radio, Film and Television. A Chinese telecommunications operator based on communication facilities established by the four affiliated Radio, Film and Television Information Network Center of the State Administration of Radio, Film and Television, China Railway Communication Center, and Shanghai Lianhe Investment Co., Ltd. as promoters and shareholders. The company was established on October 22, 1999 to facilitate foreign investors (including China Netcom Fund L.P.) to invest in Netcom China. Shortly after the establishment of the company, the above four promoters used their respective equity interests in Netcom China as capital to establish China Netcom Holdings, and the latter transferred all its interests in Netcom China to the company through China Netcom BVI.
China Netcom Fund L.P. purchased 30,967,127 Class A preferred shares of the Company with a par value of US$0.01 each in February 2001 for a cash consideration of US$325 million. After completing these transactions:
China Netcom BVI became the company’s controlling shareholder;
China Netcom Fund L.P. became the company’s minority shareholder;
The company’s The main assets are the Company's ownership interest in Netcom China; and
The legal status of Netcom China is transformed into a wholly foreign-owned enterprise.
In 2002, the company established Asia Netcom through China Netcom International Co., Ltd. Asia Netcom remained inactive until March 2003, when it acquired most of the assets, including cash, of Asia Global Crossing Limited and most of its subsidiaries under Section 363 of the U.S. Bankruptcy Code. The transaction includes the assumption of certain contracts and liabilities, including selected customer contracts and supplier liabilities, as well as a cash payment to Asia Global Crossing Limited. These assets include submarine optical cables and network assets connecting Japan, South Korea, Taiwan, Hong Kong, Philippines, Singapore and Australia, as well as sales operations in these countries. After acquiring Asia Global Crossing Limited, the Company held 51% of Asia Netcom's equity. In December 2003, the Company acquired the remaining 49% equity interest in Asia Netcom.
The formation of China Netcom Group
The People's Republic of China and the Chinese government issued a decision in 2001 to reorganize China's fixed-line telecommunications industry, which had been operating for decades. Pursuant to this decision, in May 2002, the operations of China Telecom Group, the then dominant fixed-line operator, were split into:
China Telecom Group, retaining:
— located in southern China and The main fixed-line telephone network in 21 provinces and cities in the west; and
—the assets formerly owned by the former China Telecom Group that accounted for 70% of the total bandwidth of the inter-provincial fiber optic network across the country; and< /p>
Established China Netcom Group, which owns:
—Beijing City, Tianjin City, Hebei Province, Henan Province, Shandong Province, Liaoning Province, Shanxi Province, Jilin Province, Heilongjiang Province and Inner Mongolia The autonomous region's main fixed-line telephone network; and
—an asset formerly owned by the former China Telecom Group that accounted for 30% of the total interprovincial fiber optic network bandwidth across the country.
According to the same decision, on May 28, 2003, China Netcom Group acquired all the shares of Jitong Communications Co., Ltd. In April 2004, the shareholders of China Netcom Holdings agreed to transfer their respective interests in the company to China Netcom Group as described below.
Reorganization in preparation for global offering
In April 2004, the Chinese Academy of Sciences, the Radio, Film and Television Information Network Center of the State Administration of Radio, Film and Television under the State Administration of Radio, Film and Television, China Railway Communications Center and Shanghai Lianhe Investment Co., Ltd. respectively reached a share transfer agreement with China Netcom Group. According to the agreement, these four shareholders will transfer their respective interests in China Netcom Holdings before the reorganization to China Netcom Group; as consideration, After the completion of the reorganization described below, China Netcom BVI will transfer to each shareholder approximately 38,000,000 ordinary shares of the Company with a par value of US$0.04 each, accounting in total for approximately 2.8% of the Company's issued share capital before the global offering. As a result of these and related transactions, China Netcom BVI became a direct wholly-owned subsidiary of China Netcom Group.
In addition, in April 2004, the predecessor of Shandong State-owned Assets Supervision and Administration Commission reached an asset transfer agreement with China Netcom Group. According to the agreement, Shandong State-owned Assets Supervision and Administration Commission agreed to transfer its interests, assets and liabilities related to the rural telecommunications business in Shandong Province to China Netcom Group; as consideration, after the completion of the following restructuring, China Netcom BVI will transfer the company to Shandong State-owned Assets Supervision and Administration Commission. Approximately 153,000,000 common shares with a par value of US$0.04 each, representing approximately 2.8% of the Company's issued share capital prior to the global offering.
According to the China Netcom BVI signed with the Chinese Academy of Sciences, the Radio, Film and Television Information Network Center of the State Administration of Radio, Film and Television under the State Administration of Radio, Film and Television, China Railway Communication Center, Shanghai Lianhe Investment Co., Ltd. and Shandong State-owned Assets Supervision and Administration Commission. According to the trust agreement, the common shares of the company owned by the above five shareholders are held in the name of China Netcom BVI in the form of trust.
According to the share purchase and share exchange agreement signed by China Netcom BVI, China Netcom Fund L.P. and the Company in June 2004, China Netcom Fund L.P. sold to China Netcom BVI its shares before the reorganization. All preferred and common shares of the Company held. In exchange, China Netcom Fund has the option to receive from China Netcom BVI (a) 445,500,000 ordinary shares of the Company, or an equivalent of 8.1% of the Company's fully diluted share capital prior to the global offering, or (b) a cash alternative. On September 27, 2004, China Netcom Fund L.P. exercised its option and acquired 445,500,000 ordinary shares of the company from China Netcom BVI. The Company's restructuring in preparation for the global offering was completed on June 30, 2004.