Telecom Corp goes ahead with share issue, despite deflated market

20 May 2004

China Telecom Corp yesterday ignored deflated market conditions and went ahead with a share placement in Hong Kong, raising USD1.725 billion with which it plans to fund the acquisition of ten provincial networks from its parent China Telecom. Approximately 5.8 billion shares were offered to investors at HKD2.3 each, representing a 3% discount on the operators closing stock price on Wednesday. Telecom Corp had initially hoped to raise USD3 billion from the placement of 8.32 billion new shares – 11% of its share capital – but was forced to scale back the size of the offering due to the turmoil currently gripping Asian stock markets.

Formed in September 2002 from the spin-off of China Telecom’s assets in Shanghai, Jiangsu, Zheijiang and Guangdong, China Telecom Corp is a majority-owned subsidiary of the PTO. Since being pared off, China Telecom Corp has set about acquiring the remaining fixed line infrastructure of its parent, with a further six changing hands in October 2003 (Anhui, Fujian, Jiangxi, Guangxi, Sichuan, Chongqing). The latest transaction will see Telecom Corp assume control of ten more networks, mainly in the Gansu, Xinjiang and Guizhou provinces.