Just 5% of China Telecom's issue is on offer to Hong Kong retail investors - and the offer will close today. Telecom stocks in the SAR rose on news that China Telecom's IPO was finally likely to be successful. Its shares will debut in New York on Thursday and in Hong Kong on Friday. The bulk of the cash raised will be retained by the company, with some however going to government agencies which provided shares to the IPO.

Facing up to leaner times than it had expected after raising cash from its IPO, China Telecom has said it will cut its 40 billion yuan capital expenditure budget for the next two years by 8.32 billion yuan (about US$1bn). China Telecom, like its sister companies in mainland China, faces enormous expenditures as it tries to expand its network to cover more of China's vast area, and to modernise existing facilities. Nonetheless, according to Ministry of Information Industry statistics, fixed asset investment by mainland carriers fell 30.89 per cent year on year to 96.5 billion yuan in the first nine months of the year.

In other fallout from the troubled offer process, it appears that many of Hong Kong's telephone operators have yet to reverse the rises in international direct dial (IDD) rates to China which they put in place following the mainland's controversial quadrupling of IDD charges during the IPO. Immediately lambasted as a blatant means of flattering China Telecom's profit expectations, the move led indirectly to the pulling of the issue, and after protests from SAR operators, to a climb-down, when mainland carriers offerd to compensate the local operators.

Hong Kong operators who were quick to raise their charges after the announcement, but are apparently finding it more difficult to reduce prices now that costs have fallen again, are being accused of profiteering by users. On Friday, legislators were urging Ofta to look into cases where operators had abused the IDD calling charges system.