China’s three mobile operators yesterday signed an agreement to sell their tower assets to China Tower, which the three companies jointly established last year to reduce redundant construction of telecoms infrastructure.

China Tower will compensate the operators with a combination of shares and cash. China Mobile, the country’s largest operator, will take a 38 per cent stake and receive a maximum of about 51.1 billion shares in the new venture at a value of CNY1 per share. China Unicom will hold a 28.1 per cent interest and receive about 37.74 billion shares, while China Telecom will take a 27.9 per cent stake and receive about 37.47 billion shares.

China Reform Holding Company, under China’s Assets Supervision and Administration Commission, will pay cash for a 6 per cent stake. The operators’ combined tower assets are valued at an estimated CNY230 billion ($36 billion).

China Mobile, China Unicom and China Telecom said in separate statements that they are finalising the terms of lease agreements with China Tower. To avoid disruptions in service, China Tower agreed to allow the three to continue to use their own assets after they are sold until a lease deal is in place, with the service fees to be calculated after the lease pricing is finalised.

China Mobile and China Unicom said they would receive initial cash payments of CNY5 billion and CNY3 billion respectively within 30 days of the deal closing. China Tower needs to make a second payment to the firms by the end of 2017.

China Tower, set up in July 2014 with a registered capital of CNY10 billion (then $1.6 billion), reportedly took control of almost one million towers owned by the three operators in August. The firm is expected to build more than one million towers over the next two years and the operators will no longer build their own towers.

To facilitate network sharing, the tower company will build the platforms to house the base station antennas and power equipment, but the operators will continue to install their own base station board cards and antennas.

China Mobile, with a 67 per cent market share, alone has installed over one million TD-LTE base stations across the country in just 18 months.

The tower company is expected to help the country’s two smaller operators quickly build out their 4G coverage and gain ground on the market leader, which has 82 per cent of total 4G connections.

Following the announcement, the share prices of all three operators fluctuated widely on the Hong Kong exchange today, with China Mobile ending the day up 2.74 per cent and China Unicom falling 2.77 per cent. China Telecom was down 0.5 per cent.