ill-fated october may be lying in wait for China Netcom's forthcoming ipo Mainland telecommunications stocks give investors the willies, especially when they are listed in October. China Mobile's debut began the great mainland telecoms parade through Hong Kong on October 23, 1997 - the day the Hang Seng Index plunged 1,211 points - its biggest one day loss. Fixed-line giant China Telecom tried to become the world's largest initial public offering in late October 2002, but the deal flopped miserably. The offering was resuscitated two weeks later but had shrunk 60 per cent to US$1.39 billion. For this reason, some of Lai See's more superstitious acquaintances are nervously eyeing China Netcom, which should get clearance for its US$1.5 billion IPO on Thursday. Expectations are for the deal to be downsized from earlier ambitions. Limp investor interest has seen mega offerings by the likes of Hutchison Telecommunications International (HTIL) and China Power slashed by up to 30 per cent. In Singapore, Starhub was recently forced to trim its pricing to the low end of its range. To delay is an option but the H-share boom won't last forever and as any boss knows, 'a bird in the hand ...' Similarly, any company tie up with PCCW could yield plenty of bad investor response. We're betting that those scientific rationalists at Netcom go bravely where others have been before on the assumption that it couldn't happen to them. Watch this space. You win a billion, lose a billion On the one hand, you raise US$1 billion through an equity sale. On the other, you assume US$1 billion in debt. Welcome to the wonderful world of Hutchison Whampoa. The firm is poised to raise at least $8.8 billion from selling 25 per cent of its emerging market baby HTIL but it has also promised to guarantee a shareholder loan of $7.8 billion, from which HTIL can draw at will. The cash-rich conglomerate seems not to need the money. However, the resulting accounting profit from its HTIL sale will mitigate mounting 3G losses. It also provides Hutchison's wheeler-dealers share currency with which to work other fancy deals - remember it issued HTIL shares to Japan's NTT DoCoMo for a 20 per cent stake in their British 3G venture just a few months ago. The three-dimensional thinking of Hong Kong's savviest firm should not be underestimated. Then again, think of the proverbial hamster on its rotating wheel when the feed tray empties. for the numerically challenged When a bull runs, crazy things can happen. Tiny cable and wires manufacturer Perennial International (725) saw its share price jump 8.1 times yesterday to $2.60, but it closed humbly at an unchanged 32 cents. Lai See suspects someone mistakenly keyed in an order for stock code 728 [China Telecom], which yesterday traded between $2.55 and $2.65. At least this bout of H-share irrationality cost only $45,600. get smart and stay on top Wonder why SmarTone Telecommunications stands out as the most profitable local mobile firm when its rivals have suffered either top- or bottom-line declines? Lai See pondered this question without resolution, but was drawn to yesterday's P1 City section story about the firm charging [now revoked] a $3,500 deposit fee for users whose identity card lacks a Chinese name. Rivals CSL and Hutchison long ago waived deposit fees when supported by credit card payment and proof of address. SmarTone claims there was a mix-up with its front line staff, but it sounds like a nice little earner to us. For a more convincing explanation of its success, readers are referred to today's Earful column in the technology section. the perfect compliment New blue chip China Merchants Holdings (International) knows a bit about giving thanks. Yesterday, reporters across town received a mooncake coupon with a card reading 'Thanks for your support, Happy Mid-Autumn Festival!' The Chinese version, however, offered a different message, thanking reporters for their accurate reporting. And what was labelled a 'thank you' card in Chinese became a 'congratulation letter' in English. Lai See takes it all as a compliment, even if China Merchants is a little off message.
