China, WSJ>
June 2, 1999
Dow Jones Newswires
DJ China Unicom IPO Faces Asset Quality,
Tech-Buy Doubts
By IAN JOHNSON
BEIJING -- The planned $1 billion initial public offering by China United
Telecommunications Co., or Unicom, is running into some hiccups, with
questions being raised over the financial strength of some of its assets and
access to U.S. cellular phone technology, officials at the Ministry of
Information Industries told Dow Jones Newswires.
Unicom recently merged with Guoxin Paging Corp., which will be the main
asset listed - probably on the Hong Kong Stock Exchange, officials say.
But a problem with Guoxin is the paging business is mature and growth
slowing, making it relatively unattractive to investors.
Last year, ministry officials say, Guoxin earned 800 million yuan
($1=CNY8.28) on revenue of CNY3 billion. This year's figures could be
even better, with profits topping CNY1.2 billion, they say. But over the
long term, paging services are expected to level off as more Chinese buy
mobile phones.
That would make Unicom's new mobile phone network - to be built with
Code Division Multiple Access technology - appealing to investors. Some
members of the U.S. Congress, however, say China shouldn't be allowed
to buy CDMA technology, which was developed by Qualcomm Inc.
(QCOM) and is sold under license by other U.S. companies, such as
Motorola Inc. (MOT) and Lucent Technologies Inc. (LU).
Members of Congress say that because CDMA technology encodes the
signal before sending it out over the airwaves, it is harder for intelligence
agencies to eavesdrop.
While most analysts believe the technology will be sold, the uncertainty
makes it hard for investment bankers to draw up a prospectus, according
to a consultant hired by an investment bank. "They don't know exactly
what they'll be selling," he said.
Officials stress that the problems don't mean Unicom's listing is in
jeopardy, saying it has been approved by top officials and is expected to
take place this summer.
|
