State-owned China TieTong Telecommunications plans to issue a one-year-term bond worth 2 billion yuan ($250 million) on August 30.
The funds raised will be used to build telecommunications networks in the country, regional networks and special networks for railway telecommunications, the company said.
Bank loans are now the major source of Tietong's short-term cash flow, and the company said a bond issue would help reduce financing costs.
The bond, underwritten by the Bank of Communications and CITIC Securities Company, will be sold at a discount rate. China Chengxin Credit Management has given the bond an 'A-1' rating.
There are currently four big telecom operators in the Chinese market, China Telecom, China Mobile, China Unicom and China Netcom, and two smaller players - China Tietong and China Satcom.