BEIJING-Fixed-line carrier China Telecom received the green light from the Hong Kong Stock Exchange for an initial public offering (IPO) worth US$3.4 million to US$4 billion. China Telecom is angling for a mobile license and is planning to use the proceeds of its IPO to build its mobile network. The company has also received approval to list on the New York Stock Exchange (NYSE).
This will further fuel China’s mobile telecom war, injecting a third party between China Mobile and China Unicom, which are locked in a fierce discount battle.
During the past six years, China’s mobile market has been growing three times faster than the fixed-line market. By launching a mobile business, China Telecom hopes to offset slower growth in the number of fixed-line subscribers.
The Ministry of Information Industry (MII) is expected to issue a third mobile license next year. Han Fei, an analyst with CCW Research, told the China Daily Business Weekly that “with the maturing of 2G (second-generation) technology, China Telecom is not well positioned to compete with China Mobile and China Unicom.” But he also added that “the 3G technology will give China Telecom an upper hand over its rivals.”
Telecom equipment vendors hope the recent domestic listing of China Unicom and Hong Kong and New York IPO of China Telecom could initiate a spending spree in the second half of next year. The time lag is due to the cumbersome decision-making process.
After the split-up of China Telecom into a northern and southern independent company, the northern arm changed its name to China Netcom and merged with China Netcom Corporation and Jitong Communications, offering fixed-line services in 10 northern provinces. Analysts expect Netcom to also lobby for a mobile license, but its listing would be at least a year away.
