Research On Optimizing Capital Structure Of China's Telecommunication Operators

Being a strategic property of Chinese economy, the development of Telecommunications Industry is very meaningful on promoting the social economy, enhancing our capability of independent innovation and accelerating the fusion of information technology and industrialization. Since the formation of China Unicom, approved by the State Council in December, 1993, Chinese Government has carried out several reformations on the telecommunication system and achieved great success. The latest reformation was carried out on May 24, 2008, facing the quick development of international telecommunication technology and globalization of local Telecommunications Industry. China's telecommunication operators have to reform and optimize the structure in order to improve its competitiveness against the external carriers.A company's financial stability and risk of insolvency depends on its financing source and sizes of various assets it owns. The capital structure refers to a company's financing sources and economic attributions. It is directly relevant to the development of a enterprise .The reasonable capital structure can increase the value and urge the healthy development of the enterprise. On the other hand, the distortion capital structure will reduce the enterprise value and hold back the development of enterprise, even causing bankruptcy. Therefore, it is of great significance to make researches on the capital structure of China's telecommunication operators.Now the main problems of Chinese carriers'capital structure can be summarized as follows: Firstly, the asset-liability ratio is lower compare to Chinese average level. Secondly, current liabilities take a large proportion of the total debts. Thirdly, the share is over centralized. Fourthly, of all the shareholders, state-owned shares are the most. In view of these problems, the thesis, taking the capital structure theories as a foundation, analyzes the reason of Chinese carriers'capital structure with the characteristic of telecommunication operation, and discusses the strategy measures to improve capital structure.