China Telecom Corp (中國電信), one of the three Chinese telecom carriers booted off the New York Stock Exchange, is planning to raise 47.1 billion yuan (US$7.3 billion) from a listing in Shanghai that is set to be the world’s biggest so far this year.
The A-shares were priced at 4.53 yuan apiece, above the company’s book value of 4.49 yuan each. The fundraising by China’s largest fixed-line operator is the biggest stock sale this year globally, exceeding the US$6.3 billion initial public offering in Hong Kong by TikTok rival Kuaishou Technology (快手) in February.
China Telecom was one of three of China’s big state-owned carriers whose American depositary receipts were delisted by the New York Stock Exchange in May, following an executive order issued by former US president Donald Trump barring US investments in companies with ties to the Chinese military.
Photo: Reuters
The pivot to raise funds on home turf comes as Beijing extends a crackdown on local companies that are listing abroad and as tensions between the US and China continue to ratchet up.
However, China Telecom, which went public in Hong Kong and New York in 2002, has had to scale back its fund raising in Shanghai. The sale of 10.4 billion A shares in the offering, excluding a greenshoe option, is down from the 12.1 billion it had said it would initially sell in April.
Still, if the Chinese firm exercises an over-allotment option, it could raise as much as 54.2 billion yuan from the sale, it said in a statement to the exchange.
China Telecom’s listing would help it diversify financing channels, analysts said. The telecom titan needs to ramp up funding as it backs China’s ambitions to lead in building investment-heavy super-fast 5G networks.
The company is expected to continue benefiting as growth in China’s mobile subscription base recovers along with a digital transformation drive, Jefferies analysts Edison Lee, Lydia Lin and Chi Tsai wrote in a note.
After the A-share listing, “we estimate CT will turn from a net debt position of 30 billion yuan last year to a net cash position of 21.5 billion yuan,” they wrote.
Proceeds from the Shanghai IPO would be used to build a high bandwidth industrial 5G platform, cloud-network integration, a new information infrastructure project, and research and development, China’s Telecom said in a filing to the Shanghai Stock Exchange. Chinese brokerages China International Capital Corp (中國國際金融) and CITIC Securities Co (中信證券) are joint sponsors for the listing.
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