China Network Communications Corp (Netcom) has made a huge write-down on its assets before a planned Hong Kong listing in an effort to offer the shares at a low price.
The mainland's No4 basic telecom services provider wrote down 23 billion yuan of its assets value for last year and expects to report a net loss of 11 billion yuan for the year, the Hong Kong Economic Times reported yesterday, citing sources.
Banking sources said Netcom had 'planned ahead' to bring down its book value in an attempt to lower its offering price to draw investor interest.
The huge write-off was made to avoid the problem that China Telecom faced in its first attempt to sell shares.
In 2002, China Telecom was forced to first halt then slash its share offering by 50 per cent because it was unable to price its shares at a deep discount to its book value, as demanded by investors.
Chinese regulations prevent the sale of state assets for less than their book value.
The carrier cut the number of shares offered to keep the issue at a marginal premium to its book value.
