HAND IN HAND: China Unicom and China Netcom will soon merge into the new China Unicom
in October. China Netcom will be delisted from the stock exchanges as a result

During the Beijing Olympic Games last month, billions of spectators around the world watched sports competitions and matches on their televisions and computers.

"They were all connected to the Games through the networks of China Netcom," said Zhao Jidong, senior Vice President of China Netcom, at a recent press conference. "Moreover, nearly all the Olympic-related pictures and newsletters were spread throughout the world via China Netcom services."

But supporting the 2008 Olympic Games was China Netcom Group Corp. (Hong Kong) Ltd.'s last public play. Shortly after the Games ended on August 24, the nine-year-old company, began stock exchange delisting procedures.

On August 15, China Unicom (Hong Kong) Ltd., the country's second largest mobile operator, issued a notice informing its shareholders of its merger with China Netcom, the second largest fixed-line operator. It said China Netcom would be delisted from the Hong Kong and New York stock exchanges and become a wholly owned subsidiary of China Unicom.

On the same day, the two companies jointly published a notice urging China Netcom shareholders to exchange their shares for China Unicom shares. One China Netcom share could be exchanged for 1.508 China Unicom shares, and one China Netcom American Depository Receipt could be exchanged for 3.016 China Unicom ADRs. Consequently, the two listed companies would merge and be renamed China Unicom (Hong Kong) Ltd.

China Netcom's founding

When China Netcom was founded in 1999, the Chinese broadband industry was stumbling at the starting line. During its first three years of operation, the company lacked a coherent strategy and tried to make money any way it could.

In 2001, the government decided to weaken China Telecom Group's dominant position in telecommunications services. As a result, China Telecom and China Netcom were reorganized and divided up service areas in May 2002. They agreed that China Netcom would offer services in the northern part of the country to about 10 provinces, including municipalities and autonomous regions, while China Telecom would offer services in the southern part.