Fund managers have raised concerns about the profit growth potential of China Telecom after investment banks briefed them on the fixed-line giant's global share offering.
Many, however, said their main focus would be on the pricing and dividend yield when deciding how much of their clients' money they would allocate.
'Amidst the current depressed market conditions, we won't really look that much into growth but rather stability of earnings and dividend yield,' a chief investment officer at a European asset management firm said. 'But the yield is a bit on the low side.'
China Telecom, which is aiming to raise up to US$4 billion, is expected to price its shares at between eight and 10 times prospective earnings, compared with China Mobile's 11 times and China Unicom's 14 times.
The expected dividend payout ratio will be 20 per cent and the dividend yield will range between 2 per cent and 3 per cent, based on this year's forecast dividend.
This will be comparable to the global industry average of 2.7 per cent and the 2.5 per cent of its Asian peers, according to figures from a research report by Goldman Sachs - a non-leading member of the underwriting syndicate.
But it will be lower than the average 4.9 per cent for Hong Kong utilities firms, the 4 per cent for mainland oil and petrochemical stocks and 4.5 per cent for China Telecom's US peers.