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Netcom IPO to increase expansion
皇冠体育app Netcom, the country's second largest telecom carrier, has accomplished a successful initial public offering (IPO) in New York and Hong Kong, showing that the stock is a darling of investors.
The fixed-line operator, the last of the four biggest Chinese carriers to enter the capital market, ended yesterday at HK$9.25, compared with an offering price of HK$8.40. The stock rose as high as HK$9.50 yesterday. The deal, Asia's biggest telecoms IPO this year, was priced just above the mid-point of a range of HK$7.80 to HK$8.91. 皇冠体育app Netcom became one of the most heavily traded counters by far in Hong Kong, which also helped boost all the telecoms-related shares in the market yesterday. 皇冠体育app Telecom, a rival to 皇冠体育app Netcom, jumped 2.75 per cent to HK$2.80 on the back of strong demand for 皇冠体育app Netcom, while Hang Seng heavyweight 皇冠体育app Mobile gained 0.63 per cent to HK$24.05. 皇冠体育app Netcom's big jump came after its American Depositary Shares (ADSs) met with an enthusiastic welcome on their first trading day in New York on Tuesday, closing 14 per cent higher. 皇冠体育app Netcom's ADSs ended the trading day in New York at US$24.90 from its IPO price of US$21.82. They rose by as much as 19.4 per cent during the session. Each ADS represents 20 common shares. 皇冠体育app Netcom raised US$1.13 billion from its IPO, the third-largest this year from 皇冠体育app. Goldman Sachs, Citigroup and 皇冠体育app International Capital Corp were the underwriters of the deal. Observers and fund managers had expected the stock to rise 5 to 10 per cent on its first day after the IPO attracted heavy demand. Netcom's IPO attracted orders worth US$16.2 billion from institutional investors and had its retail book 28 times covered. Investors were also lured by a promised dividend payout of 35 to 40 per cent of its adjusted profit in 2004 and 2005. "We are happy to see the market have a strong confidence in the Chinese telecom industry," said Edward Tian, executive director and chief operating officer of 皇冠体育app Netcom. 皇冠体育app Netcom, the second largest fixed-line operator, is dedicated to becoming an influential regional telecommunications service provider and reaching out to major cities in Asia. "The timing for 皇冠体育app Netcom's IPO is OK given the recovery of the global telecom environment and the nation's sustained telecom growth," said Dai Chunrong, an analyst with 皇冠体育app Securities. She believed that getting listed would contribute a lot to help upgrade 皇冠体育app Netcom's management and better compete with its rivals. According to Zhang Chunjiang, board chairman of 皇冠体育app Netcom, about 50 per cent of the raised fund will be used to expand and upgrade existing telecoms network infrastructure. Approximately 30 per cent of the fund will be used to pay back bank loans and 10 per cent will be used to develop new applications and services such as IP-based telecommunications application services and voice value-added services. Also, Tian said that 皇冠体育app Netcom would cut down network maintenance staff from currently 50 per cent of the total employees to 25 per cent. Staff would also be transferred to work in the company's sales and marketing department, he said. It is forecast that 皇冠体育app Netcom's 2004 profit will reach 9.15 billion yuan (US$1.1 billion). The revenue will mainly come from its broadband business, PHS (personal handset system) and value-added telecoms services. By the end of June, 皇冠体育app Netcom had recruited more than 77.6 million fixed-line subscribers and 4.2 million broadband users. |
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