Rail Operator to Unload Nearly 50% of Wi-Fi Business

China’s rail operator plans to divest nearly half of its Wi-Fi business in its latest effort to bring in private money to cut down on mounting debt.

China Railway Corp. is selling a 49% stake of its wholly owned subsidiary Bullet Train Networks Technology Ltd. for at least 3 billion yuan ($478 million), according to a filing posted (link in Chinese) on the China Beijing Equity Exchange on Monday.

Interested buyer must have “a strong financial profile, liquidity and good credit,” the filing said. In addition, the filing laid out rules excluding foreign ownership of the stake.

State-owned CRC set up Bullet Train Networks in December with 50 million yuan in capital. It’s the sole operator of Wi-Fi services on select bullet trains.

The proposed sale marks CRC’s latest move to bring in private investors as part of structural reforms to reduce its immense debt. As of June, CRC had accumulated 4.77 trillion yuan in debt after years of frenzied development to build up the country’s ever-expanding railway network.

Last year, the rail operator signed a 40.9-billion-yuan deal with a consortium led by the private equity giant Fosun International Holdings to build and operate the country’s first privately controlled rail line.

The 269-kilometer (167-mile) rail line, which will link Zhejiang province’s capital, Hangzhou, with the provincial city of Shaoxing, has been hailed as a major milestone in CRC’s efforts to lure private funds to the railway industry.

CRC has also been diversifying revenue sources by partnering with third parties, including mobile payment platforms WeChat and AliPay, to offer ticketing and meal services.

The rail operator reiterated in March that it will consider other options to push forward its reorganization plan such as an eventual stock market listing.

In January, it signed a strategic agreement with the Shenzhen Stock Exchange, which agreed to help CRC carry out plans that include debt-to-equity swaps, asset securitization and mixed-ownership reforms.

Contact reporter Mo Yelin (yelinmo@caixin.com)