UPDATE 3-China Telecom pays $8 bln for CDMA, sees 100 mln users

(Adds analysts' comments, share market action)

By Vinicy Chan

HONG KONG, July 28 (Reuters) - China Telecom (0728.HK: Quote, Profile, Research) will pay as much as $8.6 billion to use its parent's newly acquired wireless network for the next three years, as the country's top fixed-line carrier enters the more lucrative mobile market hoping to more than double its subscriber numbers by 2010.

At the same time, China Telecom's parent plans to invest 80 billion yuan ($11.7 billion) over three years expanding and upgrading its new Code Division Multiple Access (CDMA) network, top executives told Reuters on Monday.

In a three-way deal that helped anchor a government-led sector overhaul, China Telecom and its state-run parent agreed in June to split the cost of taking over Unicom's underperforming CDMA operation.

China Telecom aims to launch its own CDMA mobile business by end-February, Chairman and CEO Wang Xiaochu said in an interview, debuting in a market dominated by China Mobile (CHL.N: Quote, Profile, Research) and its smaller rival China Unicom (0762.HK: Quote, Profile, Research).

"We will not compete with China Mobile (0941.HK: Quote, Profile, Research) and China Unicom on pricing," he said. "Our target is to grow high-end urban subscribers."

Often seen as a less-popular alternative to China Mobile's Global System for Mobile Communications (GSM), China Telecom hopes to increase its CDMA users to 100 million by 2010 from just over 40 million now.

"China Telecom will certainly become a significant competitor to China Mobile," said Tim Smart, head of telecoms analysis at Macquarie. "China Telecom is focusing its marketing effort to attract high-end customers, aggressively targeting China Mobile's urban subscribers by bundling mobile, broadband and fixed line services."