China Unicom Permitted to List in Domestic Stock Market for Funding CDMA Project

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Last updated at: (Beijing Time) Thursday, March 07, 2002

China Unicom Permitted to List in Domestic Stock Market for Funding CDMA Project

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The plan for China Unicom Group, the parental company to issue Share-A in domestic stock market has won approval of the departments concerned and is expected to finish its procedures for listing within the year but with no revelation of its particular schedule. This was made known by Yang Xianzu, Chairman of the China Unicom Ltd. when he was attending the National People's Congress on Mar.6, 2002.

Person of sources expressed sometime ago, the assets of China Unicom Group in connection of its Share-A listing accounted for 51 percent of equities of its listing companies in Hong Kong and New York with its fund-gathering up to RMB 12.5 billion yuan. The person of the executives did not exclude the possibility that the Share-A distribution might exceed in scope and scale that as did the Sinopec in June of last year, becoming the largest one for Share-A to pool in funds at the stock market. The A-Share fund pooling of the Sinopec came to RMB 11.8 billion-yuan.

Hong Kong Stock Company to list in domestic market is backed up by relevant policies

China does not encourage all telecommunication-operators to list in overseas market, expressed Wu Jichuan, Minister of the Ministry of Information Industry when interviewing the reporter, and it is also a very good choice for them to list at the domestic stock market. This has laid down a policy-basis for the A-Share of China Unicom to list domestically.

Among the four operators in the Chinese telecommunication market, the two operators of China Unicom and China Mobile, as learnt, have already got listed in overseas market. The two companies have so far succeeded in drawing in a capital of more than US$ 20 billions in the stock exchange market, thereby enhancing greatly the company's management level. However, the great shortcoming in this type of operation lies in the separation of investors and consumers, entailing a serious clash between the benefits of the two, pointed out Wu Jichuan. Should the share-investors and consumers be able to get combined into one the situation can be made a little in balance as he holds. It's not necessarily for telecommunication operators to list in the overseas market. Along with the domestic stock market tending to get mature the domestic market will also become a very good choice. And in the meantime the domestic stock-investors will have a chance to purchase telecom shares of higher growth.

To pool in RMB 10 billion-yuan for the construction of CDMA projet

In recent years, we have seen the fund-collecting function of A-Share set many red-chips eager to make a try. The first day of A-share listing by User's Friend Software Co., Ltd. resulted a big rise in the domestic stock market, making the personal assets of Wang Wenjing to reach RMB 5 billion-yuan whereas the listing by the Kingdisk at the Hong Kong stock market was not very satisfactory. The high rate of benefit made more Hong Kong stock listing companies to rivet their attention on the domestic A-share market.

Like China Mobile, the listing plan of China Unicom in the domestic market receives no less attention from various circles. The putting into construction of narrow-band CDMA has infused a stronger desire for it to finance, and a single Hong Kong capital market is not enough to meet its big demand for more funds and so to open up a new channel for financing is a necessary outcome.

As proved by person of China Unicom the A-share listing as launched by it is mainly to finance for its subsidiary CDMA project. In the early days of January, 2002 we came to find China Unicom launch into the market its CDMA phone numbers and the users reached 15.15 million households in the first period while its final target is to aim at 51 million households three years later. In the meanwhile, China Unicom has also put in a surprisingly huge "bet" with its first term investment to reach RMB 12.1 billion-yuan while the long-term investment will be added to some 70 billion-yuan.

In view of the incessant reduction in charges for telecommunication service, said a person of the trade the mobile phone in the GSM system service will enjoy an absolute priority. For China Unicom to avoid the strong while engage with the weak is undoubtedly a logical choice in the development of its CDMA network. China Unicom has only less than 10 percent shares in the GSM service market, which means far from being up to neck in the pit and so to start from scratch doesn't mean anything heartbroken for it. Moreover, the fast increase of the GSM users makes the existing system volume tend daily to saturation. The problem of low rate in getting connected or even falling off the line has rendered the service quality unstable. However, the CDMA system, though belonging to the second generation of telecommunication technology as does the GSM system has yet the advantages of low radiation, steady signal and low price. Therefore, the whole-hearted dedication by China Unicom in providing CDMA service will prove to be a "powerful weapon" for a possible victory in the competition.

By PD Online Staff Han Rongliang

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