Telstra CEO Sol Trujillo has announced that Hong Kong subsidiary company CSL will be merged with competing phone company New World Holdings as part of a planned push into the China market.

CSL is an important asset in our portfolio because we have an asset that we can enhance the value of said Trujillo. Part of that strategy is to merge the company with a local competitor.

He announced that the company had signed a Memorandum of Understanding to merge with New World Mobile Holdings. The debt free merger will result in Telstra owning 76.4 per cent of the merged enterprise with New World owning the remaining 23.6 percent. Telstra will also clear HK$244 ($42m) million in cash as part of the deal

“CSL is one of the best run mobile companies that I have had a chance to look at,” said Trujillo who said the merged organisation may help to satisfy WTO obligations and allow the company to push into the lucrative China market.

Telstra, New World Development and New World Mobile Holdings have agreed to a period of exclusivity until 2 December 2005 with a view to reaching final agreement.