The firm, which is overshadowed by giant rivals China Telecom and China Netcom, is also planning a public share listing, Chief Technology Officer Zhou Huilin said on the sidelines of a telecoms conference in Beijing.

"But it's hard for me to give specifics because this still depends on the State Development Planning Commission."

The bond issue is pending commission approval.

"We are striving to launch the issue next year," Zhou said.

Created to provide telephone services along China's sprawling railroad network, Railcom was billed as a new force in China's fast-growing phone market when it rolled out its service to other customers early last year.

But the firm was shunted onto a sidetrack in an industry shake-up in May, and its efforts to attract more users have been hampered by dated networks and patchy interconnection with the networks of China Telecom, analysts said.

Railcom is determined to boost its market share from the current 1 percent through heavy spending on networks, Zhou said.

While Zhou declined to give a planned budget, Railcom officials have said the company plans to spend 14 billion yuan (US$1.7 billion) between April and next March on its networks.

Railcom will also cut its 70,000-person workforce by 40,000 people over four years to attract investors and float shares, Zhou said.

It was not clear when the firm would start cutting jobs.

Railcom, 51 percent owned by the Ministry of Railways and 49 percent by local railway authorities, has invested more than 10 billion yuan (US$1.2 billion) in the past two years in more advanced networks to provide telephone, data and Internet services, Zhou said.

Some 2 to 3 billion yuan (US$242-362 million) was spent on backbone networks covering most Chinese cities and provinces, he said.

But the firm still needs a "huge amount" of capital to build metropolitan-area networks, Zhou said. Railcom has 3.5 million fixed-line subscribers.

"Bringing in more investors will be one way to raise capital; listing shares will be another," he said.

In the industry restructuring, China Telecom inherited networks in 21 southern and western provinces, while China Netcom got the networks of 10 northern provinces and cities plus the assets of upstarts China Netcom Corp and Jitong Communications.

China Telecom still dominates the fixed-line market with an estimated 62 percent of users, while Netcom has 37 percent, according to the Ministry of Information Industry.

(Business Weekly December 10, 2002)