China Mobile puts its hands up for issuing depository receipts for mainland Chinese investors
The upcoming Hong Kong IPO of China Tower, which could match smartphone maker Xiaomi’s potentially huge listing, will also benefit its largest shareholder China Mobile, chairman says
China Mobile, the world’s largest telecoms operator by subscribers, said it will consider returning to the mainland for a listing via the Chinese Depository Receipt trial, with the main purpose of letting its 900 million domestic users “share the fruits of growth”, after regulators release relevant rule details.
The Hong Kong-listed company is one of a handful eligible for issuing CDRs, as the recently announced trial programme only allows those overseas-listed Chinese companies with a market cap of at least 200 billion yuan (US$31.4 billion) to float at home.
The programme also applies to private firms in “innovative sectors” valued at 20 billion yuan or more and with operating revenues of at least 3 billion yuan in the past year.
Beijing announced the CDR trial earlier this year, which is modelled on US-listed American depository shares, in a bid to lower regulatory barriers for offshore-listed Chinese companies to list at home.
“We are closely watching [the CDR mechanism],” Shang Bing, chairman and executive director for China Mobile, said on Thursday in Hong Kong at the company’s annual general meeting.
“We are a big company with abundant cash flows, so the main purpose of a potential mainland listing will just be to let our 900 million domestic users share the fruits of our growth and to support our future development.”
Shang said the company could consider the CDR plan after the regulators issue clear guidelines about the mechanism.
“[But] before we do that, we will take into consideration the interests of all parties, especially that of existing shareholders, as well as the company’s long-term development,” adding “we do not rule out the possibility of our subsidiaries going back to the A-share market for an IPO.”
Separately, Shang said the Hong Kong listing of China Tower will help the world’s largest mobile tower operator with nearly 1.9 million sites across China improve its own financial condition, including asset and debt ratios.
China Tower, which was set up by China Mobile and its two smaller state-owned rivals in 2014, has recently filed for a Hong Kong IPO. It is poised to become the city’s second mega listing this year after smartphone maker Xiaomi.
Analysts from Jefferies estimated China Tower to be worth 267 billion yuan before the IPO.
Shang said China Mobile will try to control the rental cost of telecoms towers this year from China Tower and keep it under 40 billion yuan, reflecting a slight increase from 36.9 billion yuan last year.
China Tower is building 80,000 new towers in 2018, of which 30,000 will be exclusive to China Mobile, he added.
Xiaomi also filed for a Hong Kong IPO earlier this month, reportedly seeking a valuation of between US$60 billion to US$70 billion, which could be the world’s biggest stock market debut since 2014.