A statement from China Netcom stated it will purchase the State-owned shares of Jitong Communications worth 481.9 million yuan (US$58 million).

All Jitong's assets, business and staff will be incorporated into China Netcom's regional branches.

"It's a big step towards consolidating our business," the statement said.

Jitong Communications has developed 121 subsidiary companies nationwide since its establishment in 1993.

"It is the result of continued efforts to sharpen our competitive edge," said the statement.

Sources close to China Netcom said Jitong's 10 provincial branches in the north will be merged with China Netcom's local subsidiaries.

Jitong's six southern branches in Fujian, Anhui, Hunan, Hubei and Shanghai will be merged into China Network Communications, part of China Netcom.

Other regional branches will be incorporated into China Netcom's local subsidiaries.

China Netcom also pledged yesterday that the takeover of Jitong Communications will have no impact on its customer service.

Analysts predicted the merger will be finished by the end of next month.

They said the merger reflected efforts by Zhang Chunjiang, newly appointed general manager of China Netcom, to position the company better in the domestic market.

Netcom had revenue of 68 billion yuan (US$8.2 billion) last year, ranking third among China's major telecom operators.

(China Daily June 12, 2003)