China Netcom Group Corporation (China Netcom), the country's second largest fixed line operator, has agreed to buy four provincial networks from its state-owned parent, China Network Communications Group, for Rmb 36 billion ($4.5 billion). The company will pay Rmb12.8 billion in cash and assume debt of Rmb23.2 billion. This will boost Netcom's earnings per share by 13.8 per cent this year and offer long-term growth as well as economies of scale. The assets will, however, also lower Netcom's future profitability as their net profit margin was 10 per cent in the first half of the year, compared to the 15.3 per cent of Netcom's current business. However, company sources say that the impact on profitability would be minimal as the new business would account for only one-third of the company.