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Bangkok Post
Bangkok Post
Business

China Telecom, Exiled From U.S., Prices $7 Billion-Plus Shanghai Offering

One of China's big three telecommunications carriers set the price for a share sale in Shanghai in which it plans to raise about $7.3 billion, months after it was cut off from U.S. markets.

The stock offering by China Telecom Corp. would be the world's biggest new listing in more than a year, Dealogic data shows--highlighting the huge sums that Chinese corporate champions can access by tapping a domestic investor base. Dealogic counts the deal as a new listing but not an initial public offering because China Telecom is already listed in Hong Kong.

In May, China Telecom, and its peers China Mobile Ltd. and China Unicom (Hong Kong) Ltd., lost appeals against being delisted from the New York Stock Exchange, which was moving to comply with an investment blacklist introduced under former President Donald Trump.

The offering would be the world's largest new listing since last July's $7.6 billion stock offering by Semiconductor Manufacturing International Corp. on Shanghai's fledgling STAR Market, Dealogic data shows. SMIC, the leading Chinese chip maker, earlier delisted voluntarily from the U.S.

China Telecom might not hold this year's record for long. China Mobile, the largest of the Chinese telecoms trio by market value and subscriber numbers, is also pursuing an onshore listing of a similar size. Shares in China United Network Communications Ltd., which indirectly owns a majority stake in China Unicom, already trade in Shanghai.

China Telecom said Friday that it plans to sell up to 10.4 billion new shares before listing on the Shanghai Stock Exchange. It set an offer price of 4.53 yuan each, the equivalent of 70 cents apiece, for the deal.

Underwriters have the option to sell 15% more stock in China Telecom, which would boost the total fundraising size to the equivalent of nearly $8.4 billion. The enlarged deal value would be roughly in line with China Telecom's earlier stated target.

More Chinese companies are raising funds in their home market or in Hong Kong, hoping to tap investors who are more familiar with their businesses and who are willing to pay a premium for their shares. The government has tried to encourage more onshore technology listings, partly by launching the STAR board, which has a more market-based system for initial public offerings than China's traditional boards.

China Telecom has a market value of around $30.5 billion. Its Hong Kong stock hit a nearly 18-year low in January, but has since bounced back. Chinese stocks have been rattled by a widening series of regulatory crackdowns, but investor confidence has been most shaken in large private-sector-owned tech platforms, rather than in state-owned enterprises such as China Telecom.

Its stock closed at 2.93 Hong Kong dollars a share on Thursday, the equivalent of 38 cents--meaning that China Telecom expects onshore investors to pay a considerably higher price to back the company.

The company plans to use the proceeds to develop superfast 5G, or fifth-generation, services for industrial-internet uses, and cloud-infrastructure projects. It expects net profit for the first six months of this year to rise by as much as 28% from the same period a year earlier, to 17.9 billion yuan, according to its listing prospectus.

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