China Telecom finalized a deal on Monday to buy China Unicom's CDMA business, another big step towards consolidation among Chinese telecom companies.

China Telecom is paying 43.8 billion yuan (US$6.41 billion) for the CDMA (Code Division Multiple Access) network, which had 43.17 million subscribers as of June 30. It will also take on 29.3 percent of China Unicom's total employees, the two companies said in a statement.

China Unicom is merging with China Netcom, and plans to use the proceeds from the sale to expand its GSM (Global System for Mobile communications), which had 127.6 million subscribers at the end of June. Unicom said it will also begin preparations to offer 3G services, but gave no timetable as to when those services would begin.

The latest round of consolidation was announced in late May, and will create three major carriers, China Netcom, China Mobile and China Telecom. Each of the companies will offer fixed-line, mobile and other services. As such, China Unicom -- which was originally created as the state-run competitor to former monopoly service provider China Telecom -- will be folded into China Netcom, while China Mobile is acquiring China Tietong for its fixed-line network and China Telecom is taking on China Unicom's CDMA network.

Once the consolidation is complete, China's new telecom regulator, the Ministry of Industry and Information Technology, will issue 3G licenses. China Mobile is already publicizing its 3G service, which will use the domestically-developed TD-SCDMA (Time Division Synchronous Code Division Multiple Access) standard, and is providing 3G services to about 18,000 users during the Beijing Olympics, which begin August 8.

The IDG News Service is a Network World affiliate.