Unicom raises IPO target to $5 billion plus oversubscription rights.
JohnG
technology.scmp.com
Monday, June 12, 2000
INTERNET
Unicom lifts IPO
target to US$5b
ERIC NG
China United Telecommunications (China
Unicom) is to increase the price of its
initial public offering, which would see it
raise up to US$5.05 billion - before an
over-allotment option - in one of Asia's
biggest issues outside Japan.
Sources close to investment banks
arranging the offering confirmed that the
target price range had been raised to
between HK$13.80 and HK$16, from
between HK$11.50 and HK$14.50, an
increase of 10 per cent at the upper end.
The company is reported to have seen
demand for 1.4 times the amount of shares
on offer after its roadshow in the United
States, according to FinanceAsia.com, the
Web site of monthly magazine Finance
Asia.
At the earlier price range, China Unicom -
the mainland's second largest
telecommunications firm - would have
raised between US$3.62 billion and
US$4.57 billion, excluding
over-allotments.
The revised range will see it raise
between US$4.36 billion and US$5.05
billion. That could increase to as much as
US$5.6 billion after the exercise of the
over-allotment option.
News of the increase in offer price
follows a strong recovery in markets in the
past two weeks.
Since China Unicom began its roadshow
on May 31, the Hang Seng Index has
surged 15.2 per cent, with rival China
Telecom (Hong Kong) gaining 26.1 per
cent.
"The general market performance has been
a benefit for China Unicom," said
Worldsec International director Carlton
Poon.
Pacific Challenge Securities research
director Ricky Tam Siu-hing said he
would not be surprised by a rise in China
Unicom's offer price, given the general
market recovery and China Telecom's
strong comeback.
"When China Unicom first launched its
roadshows, the market response was not
very enthusiastic, as some people thought
the company's earnings were still heavily
reliant on its paging operation, but China
Telecom (HK)'s strong rebound has
helped lift sentiment," he said.
France Telecom's acquisition of British
mobile-phone network Orange last month
also raised valuations for telecoms firms,
benefiting China Unicom, he added.
The flotation is part of Beijing's attempts
to turn China Unicom into a credible
competitor to dominant China Mobile, the
recently renamed parent of China Telecom
(HK).
China Unicom, which has cellular, paging,
fixed-line and data communications
operations, is expected to complete its
international and public share offers on
Thursday, with final pricing scheduled for
Friday.
Trading in the company's American
Depository Shares will start in New York
on June 21, while trading in Hong Kong is
expected the following day.
Co-sponsors for the public offering are
Morgan Stanley Dean Witter and China
International Capital Corp.
Hutchison Whampoa became a strategic
investor in China Unicom earlier this
month, when it agreed to take up about 2
per cent of the enlarged share capital for
US$400 million.
Talks also have reached advanced stages
with some leading telecoms players
outside Asia seeking to be a part of China
Unicom, according to sources.
Meanwhile, China Daily has reported that
China Unicom's parent, China United
Telecommunications Corp, said that as of
June 5 the number of subscribers to its
mobile network had reached 10.1 million,
or 14 per cent of the domestic market.
"Our subscribers will be somewhere
between 15 million and 18 million by the
end of this year," vice-president Lu
Jianguo was quoted as saying.
"We will control 35 per cent of the
domestic market in 2005."
The firm also offers domestic and
long-distance phone services over Internet
protocol (IP) networks.
It plans to expand coverage of its IP-based
phone service to 220 cities this year. |
