China Telecom Corp chairman Wang Xiaochu yesterday confirmed the mainland fixed-line telecommunications giant would spin off its network and engineering services unit for a Hong Kong listing.
Market sources said the new company, China Communication Services, would look to raise between US$200 million and US$400 million in an initial public offering in the second half. Goldman Sachs and China International Capital Corp are the deal sponsors.
China Communication Services will include the telecommunications network design and engineering businesses in six provinces and cities - Shanghai, Guangdong, Fujian, Hainan, Hubei and Zhejiang - which have a total asset value of 23 billion yuan, according to mainland media.
'The company's restructuring is pending approval. Once we get it, we will consider listing the company on the Hong Kong stock market,' Mr Wang said after the annual general meeting yesterday. He declined to give further details.
'The new company can help mobile operators such as China Mobile and China Unicom with network design and other related services. We have the talent and we can broaden our customer base.'
The nation's telecommunications operators are preparing for an increase in capital spending when China issues 3G mobile licences. The government has not given a timetable for granting the licences or said how many it plans to issue.