Netcom IPO may be further postponed By Chen Zhiming (China Daily) Updated: 2004-07-02 09:04
China Network Communications Group Corp (China Netcom), the country's
second-largest fixed-line phone company, is likely to further postpone its
initial public offering (IPO), insiders and industry experts say.
It is widely speculated that China Netcom is to float its IPO in the third
quarter of this year.
"What investors are looking to is China Netcom's business performance instead
of just business models," said an expert from the China Academy of
Telecommunications Research under the Ministry of Information Industry (MII),
who declined to be named.
"It is not the right timing for the company to get listed before the company
has substantially improved its business performance," he told China Daily
yesterday.
"Currently, there are not many selling points for China Netcom in comparison
with other telecom operators such as China Telecom and China Mobile," he said.
So far, China Netcom has a total asset of 240 billion yuan (US$28.9 billion)
with a 58 per cent debt asset ratio.
On Wednesday, China Netcom was brought into the limelight as PCCW Ltd
announced that its negotiation to sell its phone business to China Netcom has
yet to be reached.
"We are taking great care to work out a deal that will be good for both
companies and good for Hong Kong," PCCW Group Managing Director Jack So said.
PCCW Ltd is the largest communications provider in Hong Kong.
PCCW in May said that it might sell a stake in its phone business, Hong
Kong's largest, to China Netcom.
It is reported that China Netcom hopes to combine PCCW's Hong Kong network
with its own network in southern Guangdong province before listing.
However, sources from China Netcom in Beijing said there is no confirmation
if negotiations to buy PCCW's telephone network would be delayed or not.
"We have no idea about that so far as only few of our senior officials are
involved in the issue," said an official with China Netcom, who insisted on
anonymity.
Some analysts said the delayed purchase may postpone China Netcom's listing
plan in September as it hopes to finish the purchase, which may help China
Netcom to gain investors' confidence as PCCW is an international firm.
But Zeng Jianqiu, a professor with Beijing University of Post and
Telecommunications, disagrees.
"The delay of the purchase will have almost no impact on the process for
China Netcom's listing plan as the Hong Kong market is quite a tiny one compared
to the Chinese mainland market," he said.
As far as the listing plan is concerned, factors such as self-evaluation,
business performance, scale of subscribers, and international investment climate
are the major concerns for the company, he said.
He also emphasized that though the global telecom investment environment is
recovering, there are still uncertainties.
In January, China Netcom's General Manager Zhang Chunjiang said in an
interview that its process of listing was shifting into high gear.
It is reported that China Netcom Group Corp has designated three underwriters
for its planned listing on the Hong Kong and New York stock markets and plans to
sell as much as US$2 billion of stock to help upgrade
networks.
