China's largest fixed-line service operator China Telecom Corp. Ltd., listed on the Hong Kong stock exchange, on Wednesday denied speculation that the company would spend four billion yuan to purchase Beijing Telecom from its parent company, the China Telecom Group.

"China Telecom hasn't held any discussions on the asset purchase with the parent company yet," William Li, a senior manager from China Telecom's investor relations department, told China Securities Journal, a newspaper run by Xinhua News Agency.

Media reports on Tuesday said China Telecom planned to purchase Beijing Telecom from its parent by the end of this year, the leading branch under the China Telecom Group in terms of revenue.

When China launched its telecom reforms in 2001, the fixed-line service in south China's 21 provinces and municipalities went to China Telecom, while that of north China's ten provinces and municipalities was allocated to China Netcom, the nation's second largest fixed-line operator.

After 2005, the two giants began to compete with each other for business, prompting them to sign an agreement to respect each other's "territory" to avoid vicious competition.

Any plan by China Telecom to purchase the assest of Beijing Telecom would be regarded as China Telecom's first major move into the territory of China Netcom.

China Telecom made a public announcement this June claiming it had signed an agreement with its parent to buy all the equities of China Telecom (Hong Kong), China Telecom (USA) and China Telecom System Integrated Company for 1.41 billion yuan.

At the time there were suggestions from within the market that, under pressure from the rapid expansion of the mobile phone business, China Telecom would quicken its pace to acquire assets and seek a full listing on the A-share market to enhance its profit-making capabilities.

(Xinhua News Agency September 20, 2007)