All the stops were pulled out to ensure China Telecom secured a smooth stock market listing. The mainland's growth-challenged dominant carrier was always going to be a hard sell but state firms' past listing successes in tough market conditions had inured most commentators to a possible failure. That all changed yesterday. Any notion of bullet-proofed mega-mainland stock offerings was scotched when China Telecom postponed its issue due to poor overseas investor take-up. China's Telecom's core problem was that investors thought its shares too expensive for the growth prospects on offer. By insisting on a sale price above its historic book value, China Telecom was looking back. Investors, by contrast, were looking ahead at likely future income and considered a valuation of at least 11 times earnings too rich. Despite promoters' claims that the firm should command a premium to comparable international operators, investors saw a growth-challenged dominant player facing competitive threats on every front. The company may yet sell its shares, albeit less of them and at a cheaper price. Market conditions were undoubtedly tough, with international investors still fleeing unloved telecom firms. Resuscitating the offering requires Beijing to bite the bullet on a rule prohibiting state assets being sold below their book value. A lesson has been dished out in the harsh reality of markets and China Telecom must decide whether to postpone the deal or try again on more attractive terms. More importantly it has focused attention on the futility of massaging the market mood through opportunistic regulatory changes. A government move to raise international call tariffs charged to foreign carriers last week appeared a brazen effort to entice investors. If so, it backfired. Sophisticated investors want consistent rules of the game and saw the tariff hike as a desperate measure that was likely to be revoked later as it flew in the face of broader liberalising policies. It is a pity that top officials did not learn from a similar spat two years ago when off-the-cuff changes in mobile phone tariffs were threatened but later revoked after investors dumped China Mobile stock. Coming on the eve of the 16th Communist Party Congress, the failure is an embarrassment and threatens to derail carefully planned reforms, leaving bankers facing some tough decisions.