China Telecom Finally Goes Public
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China Telecom has priced its IPO raising US$1.4 billion thanks in large part to investments from Hong Kong tycoon Lee Ka Seng.
The once state-owned fixed-line operator sold 7.556 billion shares at HK$1.48, which was considered the low end of its expected offering price. In U.S. terms, the offering of 75.564 million American depository receipts priced at $18.98 each. Those ADRs will begin trading next week on the NYSE.
According to press reports, completion of the offering was aided by investments from Lee Ka Seng, the richest man in Hong Kong who also has strong ties with the Chinese government in Beijing. His Cheung Kong organization, the largest real estate holder in Hong Kong, reportedly took HK$300 million to HK$400 million worth of the offering.
Still, the IPO was only about half of what the state-owned telecom concern had hoped to raise. In order to close the deal, the size of the offering was cut earlier this week.
China Telecom has more than $11 billion in revenue with 128 million customers, including more than 25 million dial-up Internet users. With that track record, China Telecom announced plans to sell 20 percent of the company in a public offering.
According to Hoovers, China Telecom was once the nation's monopoly provider of fixed-line local and long-distance phone services. But, like in the U.S., the Chinese government broken up its monopoly and created rivals for the state-owned company. The surviving China Telecom operates networks in 21 provinces in the south and west of China and represents the larger of the two split-offs. Its newly created competitor, China Netcom Group, operates in 10 provinces in the north.