China Telecom, the country’s largest fixed-line operator, will raise as much as 54.2 billion yuan (US$8.4 billion) from its stock offering in Shanghai, months after it was delisted from the New York Stock Exchange (NYSE) following a US blacklisting over purported ties to the Chinese military.
The company is selling 10.4 billion shares at 4.53 yuan each in the listing exercise, according to an exchange filing in Hong Kong. If fully exercised, an overallotment option would take the amount of shares sold to nearly 11.96 billion, matching its previously stated aim of raising about 54 billion yuan of proceeds in the flotation.
“The issue price was determined based on several factors including the fundamentals of the issuer, valuation of comparable companies, the industry in which the company operates, market conditions, needs for proceeds and underwriting risks,” the Beijing-based firm said in a regulatory filing on Friday.
Its shares fell 0.3 per cent to HK$2.92 at the close of trading in Hong Kong on Friday. They have risen 36 per cent this year.
07:30
Why China is tightening control over cybersecurity
Why China is tightening control over cybersecurity
The telecoms giant was one of four Chinese companies with listings in Hong Kong and New York to have their shares delisted from American bourses following a November 2020 executive order by former US President Donald Trump. The others were China Unicom, China Mobile and CNOOC, China’s largest offshore oil explorer.
The order banned American investors from investing in companies identified by the US Department of Defense as having ties to the Chinese military. US President Joe Biden expanded the ban to 59 companies in June, replacing Trump’s prior order. Americans have a year to divest any holdings they have in those companies.
China Telecom had been listed in New York since 2002, following China Mobile, one of the first so-called red-chip companies to list in the US, in 1997 and China Unicom in 2000. Its shares were lightly traded in New York before the delisting.
China Mobile was delisted from the New York Stock Exchange and is seeking a listing in Shanghai as well. Photo: AP
The NYSE reversed its decision several times before ultimately delisting the telecoms companies, which later lost appeals in May to return to the exchange. China Mobile is also seeking to list its shares in Shanghai.
The delisting drama also caught up the Hong Kong’s Tracker Fund (TraHK), which is managed by the Hong Kong arm of Boston-based State Street Global Advisors. Three of the delisted stocks are part of Hong Kong’s benchmark Hang Seng Index, which the Tracker Fund mirrors.
State Street flip-flopped over whether to remove the blacklisted stocks from TraHK to comply with the US order, facing criticism from Hong Kong officials. The company later issued an advisory stating the fund was inappropriate for US investors and has since banned Americans from buying its shares.
At the same time, the US has threatened to delist other Chinese companies if they do not share their audit papers with a US oversight board. The US Securities and Exchange Commission announced last month it would require additional information from Chinese companies seeking to go public in the US following new rules announced by Beijing to increase scrutiny of overseas listings.
This article appeared in the South China Morning Post print edition as: China Telecom aims for 54b yuan in Shanghai deal
