China Telecom plans to raise funds in Shanghai bourse after New York delisting

Che Pan
·3-min read

China Telecom, the country’s largest fixed-line network operator, plans to sell shares in Shanghai to access wider financing in its home market, months after it was delisted by the New York Stock Exchange (NYSE) under a Trump administration executive order.

The Hong Kong-listed company, which is controlled by state-owned China Telecommunications Corp, proposes to issue up to 12.09 billion yuan-denominated shares – equivalent to 13 per cent of the enlarged capital base – on the Shanghai Stock Exchange, according to Ke Ruiwen, the firm’s chairman and chief executive, in a conference call for its 2020 financial results announcement on Tuesday, after the market closed.

China Telecom did not disclose pricing for the new shares. In Hong Kong, the company’s stock jumped as much as 9.8 per cent on Wednesday, as investors welcomed news of its planned secondary listing.

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China Telecom may increase its offering by 15 per cent upon exercising its over-allotment “greenshoe” option, according to the company’s filing in Hong Kong on Tuesday.

Ke Ruiwen, the chairman and chief executive of China Telecom. Photo: SCMP
Ke Ruiwen, the chairman and chief executive of China Telecom. Photo: SCMP

“The final size of the listing is dependent on the company’s need for capital, regulatory approval and market situation at the time of listing,” Ke said.

He indicated that the proceeds will be used by the company for its 5G and industrial internet initiatives, research and development, and integration of cloud computing and telecoms infrastructure.

China Telecom’s planned secondary flotation in Shanghai comes months after the NYSE suspended trading and delisted the company’s American depositary shares (ADSs), along with those of industry peers China Mobile and China Unicom, to comply with a November 2020 executive order by former US President Donald Trump that bars Americans from trading in companies with ties to China’s military.

It was one of a series of moves in the waning days of the Trump administration to limit access by Chinese companies to American capital markets and technology, intensifying the trade and tech dispute between Washington and Beijing.

China Telecom, China Mobile and Unicom apply to New York Stock Exchange to reverse delistings

The three Chinese telecoms giants filed requests with the NYSE in January to review and reverse the delistings, hours after Joe Biden was sworn in as the 46th US president.

In 2020, China Telecom spent 39.2 billion yuan (US$6 billion) in rolling out its 5G infrastructure, with 380,000 base stations in operation as of December. Ke said China Telecom has a 39.7 billion yuan capital spending budget for 5G network development in 2021, which will enable it to expand the number of its 5G base stations to 700,000 by the end of this year.

Liu Guiqing, executive director of China Telecom, said in the same conference call on Tuesday that the supply of chips for 5G network equipment and smartphones will not be affected in 2021.

China Telecom, which had 351 million mobile subscribers at the end of December, posted revenue of 373.8 billion yuan last year, up 4.5 per cent from 2019. Net profit grew 1.6 per cent to 20.8 billion yuan.

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