China Railcom Denies Share Purchase of Listed Firm

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Last updated at: (Beijing Time) Wednesday, July 10, 2002

China Railcom Denies Share Purchase of Listed Firm

China Railcom Tuesday dismissed rumours it would go public in the domestic stock market via indirectly holding major shares of a listed firm.

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China Railcom Tuesday dismissed rumours it would go public in the domestic stock market via indirectly holding major shares of a listed firm.

The denial also wiped away people's concerns about China Unicom, which is actively preparing a domestic listing and aiming to become the first domestic listed telecom carrier.

The rumours surrounding Railcom surfaced from a statement released over the weekend.

Xingtai Mill Roll Co Ltd, a mill firm based in Hebei Province, released an announcement on Sunday saying China Railcom may indirectly purchase major shares of the company via its construction joint venture, Railcom Huaxia.

Huaxia Construction, the minor shareholder of Railcom Huaxia, is considering buying shares of Xingtai Mill Roll with equities in Railcom Huaxia, the announcement said.

Some local media speculated China Railcom would become the first domestic listed telecom operator via this complex trade.

As China does not yet have a domestic listed telecom operator, stock investors showed deep concern over the issue.

"The statement has no relation to China Railcom, all it talks about are the company's own ideas," said Dong Binfeng, spokesman of China Railcom.

The reports saying that China Railcom will become the first domestic listed telecom carrier are pure speculation, Dong said.

Although China Railcom does have plans to go public in both domestic and overseas stock markets, it has not yet gained government approval, according to sources with the Ministry of Information Industry (MII).

All telecom carriers seeking listing opportunities

Speculation on China Railcom indicates a strong interest in telecom carriers, industry insiders said.

Domestic stock investors are not able to buy shares of the high growth telecom carriers. None of China's six basic telecom carriers are listed in the domestic A-share stock market, while two mobile operators went public in the overseas bourses and are not accessible to mainland stock investors.

China became the biggest telecom market last year with the most telephone users in the world. Telecom carriers have become the most rapidly growing companies. Domestic stock investors yearn for an opportunity to buy shares of the telecom carriers.

Due to huge capital demand in network infrastructure, all of the telecom carriers are seeking listing in overseas stock markets or dual listing in both overseas and domestic markets.

Top officials from the MII said the government supports telecom carriers going public abroad while domestic stock markets might also be a good choice for the money thirsty telecom carriers.

China Unicom, the minor mobile carrier, is now very close to the initial public offering (IPO) in the mainland bourse, according to company sources. Its IPO will be the biggest one in the mainland stock market with a minimum target of around 12 billion yuan (US$1.4 billion).

In a related development, China Telecom, the biggest fixed-line telecom carrier, is busy preparing for overseas listing. It received government approval a year ago but the IPO was delayed due to restructuring the fixed-line telecom market in which the former China Telecom was split up into two parts.

China Telecom's overseas listing will probably take place next year, according to sources from the investment banking sector.

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