China Telecom Making Heavy Weather Of IPO

by Mary Swire, Tax-News.com, Hong Kong

29 October 2002

After a book-building exercise for China Telecom's forthcoming US$3bn initial public offering ran up against some investor resistance to what was seen by some as a relatively high price, the issue was opened to Hong Kong retail investors at the end of last week, with a lukewarm response.

The Chinese fixed-line telecoms operator is offering 850 million H shares to retail investors in Hong Kong out of a total of 16.8 billion shares on offer in the IPO. The retail offering will close on Wednesday, and is expected to be no more than moderately over-subscribed, unlike the recent Bank of China (Hongkong) issue, which was increased in response to heavy retail interest.

Over the weekend, China Telecom said that it had no immediate plans to acquire five provincial networks from its parent China Telecom Group. Chairman and Chief Executive Zhou Deqiang had indicated at a press conference last week that such purchases might take place six months after listing.

China Telecom told Hong Kong Exchanges and Clearing: "The Company has no current plans, or anticipated timing in respect of any possible acquisition of quality telecommunications assets from China Telecommunications, or the number or identity of the provinces that this may involve."

The company also said that forecasts of 8% annual revenue growth given at the press ccnference were internal benchmarks, not to be interpreted as a projection of future earnings. "The company regrets the ambiguity in some of its statements made at the press conference that could inadvertently have resulted in their being misunderstood by the public," China Telecom told the exchange.

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