Full book expected for China Telecom IPO

PUBLISHED : Thursday, 31 October, 2002, 12:00am
UPDATED : Thursday, 31 October, 2002, 12:00am

China Telecom's initial public offering will be fully subscribed following a series of efforts to sweeten the issue, according to sources close to the deal.

Fund managers were expecting the fixed-line carrier to set the offer price close at the lower end of its range.

China Telecom is selling 16.8 billion shares to overseas investors for between HK$1.47 and HK$1.69 to raise HK$24.7 billion to HK$28.4 billion.

The giant fixed-line carrier allocated 840 million shares to retail investors in Hong Kong, with the rest going to overseas institutional investors. Some sources said the Hong Kong tranche, which closed at noon Wednesday, had been fully taken up. They said they were confident the international tranche would also be fully subscribed by this morning.

Over the past few weeks China Telecom has increased its promised dividend payout, lowered its offer price range and raised its international interconnection rate to lift earnings.

Company officials also indicated it would make acquisitions after six months, although China Telecom subsequently told investors to disregard these comments.

On Wednesday, China Telecom published a second prospectus to confirm that the Ministry of Information Industry had lifted the international interconnection rate for calls to China by 750 per cent to 17 US cents a minute. Analysts expect this will increase the company's revenue in the future.