Unicom leads telecoms rally on revamp talk
Shares of China Unicom, the mainland's smaller mobile operator, rose the highest in seven years yesterday, leading gains in telecommunications stocks on investor expectations that the sector will be bolstered by an industry restructuring.
Unicom climbed HK$2.24 or 15.14 per cent to HK$17.04, its largest percentage gain since December 2000.
Giant rival China Mobile gained HK$11.40 or 10.47 per cent to HK$120.30, China Telecom Corp jumped 9.57 per cent to HK$5.84 and China Netcom Group Corp rose 8.97 per cent to HK$21.75.
Goldman Sachs yesterday upgraded its rating on Unicom to buy from neutral with a price target of HK$18.90.
The investment bank rated Netcom as the player to benefit most from the restructuring.
'The restructuring will be a three-way process in which the issuing of full-service licences to the fixed-line operators, the restructuring of parent companies, and the restructuring of listing vehicles will commence by next quarter,' Goldman Sachs analyst Helen Zhu said.
Market sources said the restructuring was most likely to result in three full-service operators providing both fixed-line and mobile services.
They said China Mobile would merge with China Tietong, a fixed-line player based on the railway networks, while fixed-line operator China Telecom would acquire Unicom's CDMA network and Netcom would merge with Unicom's GSM mobile network.
The restructuring might delay the possible A-share listing of China Mobile and China Netcom, Goldman Sachs said.
But China Mobile chairman Wang Jianzhou said in Switzerland that he hoped to launch a domestic A-share listing as soon as possible but pending the resolution of various issues.
Meanwhile, the government is expected to announce changes in domestic mobile roaming tariffs soon after a public hearing to be held in Beijing next Tuesday.
China Mobile said it would follow government policy on cutting domestic roaming fees, but consumers are concerned that the company might raise tariffs for other services.