China Telecom<728><CHA>, the nation's largest fixed telecom service operator, is selling a 30% stake of its wholly-owned unit Tong Mao Hotel Holding Co Ltd for RMB 731 million, sources reported.

With a registered capital of RMB 1.77 billion, Tong Mao Hotel Holding, along with its affiliates, runs 11 hotels in seven Chinese provinces, including two five-star, six four-star and three three-star hotels. It realized operating revenue of RMB 680 million in the 2007 fiscal year, and net profit climbed to RMB 9.19 million.  By the end of March, its total assets amounted to RMB 2.44 billion.

China Telecom requires the potential buyer to inject an extra of RMB 908 million in cash in the hotel when it acquires the stake in Tong Mao Holdings. It also bars the buyer from selling or transferring the shareholding to a third party within two years after the deal.

The buyer's stake in Tong Mao Holding will rise to 49% after the completion of cash injection. And China Telecom will hold the remaining 51%.

The sale is reportedly out of China Telecom's strategy to gradually spin off subsidiary business and shift focuses on its core business, so as to strengthen its competitiveness after the country's telecom industry reshuffle.

Source:China Knowledge