BEIJING-China United Telecommunications Corporation launched its 11.5 billion yuan (US$1.4 billion) domestic initial public offering (IPO), the largest ever in China by number of shares and the second-largest in value, following oil giant Sinopec. The A shares are reserved for Chinese citizens, who for the first time get the opportunity to invest in a Chinese mobile carrier.
Subsidiary China Unicom, as well as competitor China Mobile, are already listed in Hong Kong and New York.
Twenty-five percent of the offer is reserved for strategic investors, 20 percent for institutional investors and the remainder for ordinary investors. The issue is priced at a relatively cheap 2.3 yuan (US$0.28) per share, equivalent to 20.23 times 2001 earnings. Domestic IPOs usually rise sharply on the first day of trading due to the high demand for shares from retail investors. China United’s A shares will start trading on the Shanghai Stock Exchange after a week-long holiday for China’s National Day on 1 October.
Proceeds from the IPO will be used to upgrade and expand Unicom’s CDMA network. The company also operates a GSM network.
U.S.-based Qualcomm stands to earn increased royalties from the expansion of the network. Rich Sulpizio, president of Qualcomm China told the China Daily: “We’re confident that the coming rollout of CDMA 1x and the wireless data services it enables will continue to drive the success of Unicom’s CDMA network.”
The China Unicom Group reported a first-half profit of 920 million yuan (US$111 million), up 5.7 percent year on year.
