China Netcom Plans International IPOs
China Netcom, China's second largest fixed-line carrier,
plans to have international IPOs in Hong Kong and New
York sometime later this year, most likely in September.
This will make it the fourth state-owned phone operator
to go public overseas.
China International Capital, Citigroup and Goldman Sachs
are arranging the share sale. Exact details about the
sale are not yet available.
The company is raising funds to upgrade networks to compete
with the country's largest fixed-line carrier, China Telecom,
which has about half of the nation's total of 263 million
phone lines.
China Netcom suffers from coming to the market late,
and from its customer base in the comparatively poorer
northern regions of China. At the end of 2003, Wall Street
was very
receptive to new Chinese companies, but that quickly
changed when issues of corporate
governance and auditing for several Chinese companies
came to the fore several months later.
Since then, Chinese companies have been under a pall,
and it has been harder for them to raise capital.
The Chinese government's policies for state-owned enterprises,
including banks,
under Premier Wen Jiabao have included IPOs in international
capital markets before the Chinese market is thrown open
to direct foreign investment and competition under WTO
rules. These IPO plans seem to have been put on hold,
overtaken by the urgency for a "soft landing"
for the fast-growing Chinese economy.
A large proportion of China Netcom's users are in northeast
China, formerly known as Manchuria, which is traditionally
home to China's heavy industries. This area has been another
focus of Wen's
policies, but again has been sidelined by current
events which have taken away the spotlight. While the
government has been vigorously asking Europeans and others
to invest in and reorganize these companies, major investment
has been held back by China's lack of a bankruptcy law.
The only large company in Northeast China which has attracted
significant foreign investment is Harbin
Beer.
Current unemployment rates in some cities in the region
are believed to be near 50%, and annual salaries are believed
to be one-third of those in the Beijing and Shanghai regions.
Before you go, did you like this article?
If so, you can receive a free email newsletter version
each weekday. Sign up using the China Business Express
form on this page.
