China's second-largest telecoms operator is about to complete its purchase of PCCW's core fixed-line phone units before getting listed on the New York and Hong Kong stock exchanges, a source close to China Netcom said Monday.

"Negotiations between the two are approaching the final stage. The result is likely to be released at the end of September at the earliest," said the source, who refused to be named.

The source said China Netcom is to buy half of PCCW's core fixed-line phone units for HK$30 billion (US$3.85 billion).

But uncertainties still exist as the trade hasn't been finalized, said the source.

There was no confirmation from China Netcom yesterday.

China Netcom announced early in May it was involved in talks to buy a stake of PCCW's fixed-line telephone units.

It has been reported that China Netcom hopes to combine PCCW's Hong Kong network with its own network in southern Guangdong Province before listing.

Many analysts doubted the purchase price of HK$30 billion (US$3.85 billion).

"I don't think the purchase will influence China Netcom's upcoming initial public offering," said Dai Chunrong, an analyst with China Securities.

"The purchase won't contribute a lot to enhance the profitability of China Netcom, though the company's potential stake purchase may boost investor interest in the share sale," she said.

"If the amount for purchase is real, the cost is quite excessive," she added.

There are limited prospects for the fixed-line business as all domestic telecom operators such as China Mobile and China Telecom are now preparing to invest in 3G and broadband services.

Zeng Jianqiu, a professor with the Beijing University of Post and Telecommunications, believed the purchase will have almost no impact on the process for China Netcom's listing plan as the Hong Kong market is quite a tiny one compared to the Chinese market.

He stressed that the most urgent things for China Netcom are to take a thorough study about the market and work out proper strategies right before, during and after the listing.

The China Network Communications Group Corp (China Netcom), the country's second-largest fixed-line telephone operator, has filed its listing application documents for a US$1.5 billion IPO in Hong Kong and New York.

(China Daily August 24, 2004)