Unicom's Overseas Listing, Fruit of China's Reform

China Unicom's successful overseas listing is the fruit of China's enterprises reform, and meanwhile, will be a stimulative to further reforms, Unicom's chairman and chief executive officer Yang Xianzu said Thursday.

China Unicom, the second largest telecommunications provider in China, has just made a strong rebut on the United States and Hong Kong market, with the stock rising nearly 10 percent from the initial public offering (IPO) price.

Yang, who was in Hong Kong for the company's Hong Kong debut, believed that "without the deepening of China's enterprises reform, there would be no overseas listing for China Unicom."

Overseas listing is a good way to raise money for Chinese enterprises, the CEO said, adding that it will help optimize enterprises' capital structure, reduce their debts and set a sound foundation for future development.

Yang also considered overseas capital markets very promising. "

The overseas capital market is very big and the scale of Chinese enterprises' overseas fund-raising is small," he said. "I believe there is huge potential for Chinese enterprises to raise money overseas and the prospect is very encouraging."

Unicom is planning to invest 100 billion RMB (12.82 billion U.S. dollars) into telecommunications infrastructure in the next three years, Yang said. The 4.9 billion U.S. dollars raised from its U.S. and Hong Kong listing will be of great help to the company's development plans, he said.

After listing on overseas markets, China Unicom will become an international company and face fierce competition from outside, which demands the company establish new mechanisms and increase the transparency of its operation, all of those are helpful to the company's development, Yang said.

Admitting there will be increased pressure after Unicom's overseas listing and with the deepening of opening up of the domestic Telecom market, Yang said his company has geared up for future challenges.

The company's development priorities in the coming years will be speeding up development, increasing the size of the network and bettering the networks, Yang said. Besides, the management of the company should be strengthened, new businesses should be developed, he said.

Going into more details of the company's development plans, Yang said Unicom is planning focusing more efforts and resources on the development of the company's mobile business.

Of the 4.9 billion U.S. dollars from the company's U.S. and Hong Kong listing, 67 percent will be used in the building of mobile telecommunications networks, 30 percent in long-distance and data networks, and only a small sum will go to the paging business, Yang said.

On the planned third generation mobile phone network project, Yang said his company's attitude toward the U.S.-based CDMA technology is positive, and is planning to use CDMA for its 3G systems.

CDMA has unique advantages of its own, though compared with the more mature GSM technology, CDMA is comparatively new, Yang said. He said Unicom is now studying the 3G CDMA test network programs, and once conditions are ripe, it will begin trails on the network. The chairman also expressed confidence in the expanding market share of Unicom and the huge potential for the development of the Chinese telecommunications industry.

The company, which was set up in 1993, has seen a stable increase in its domestic market share, from a 3.6 percent in 1997, to 7.4 percent in 1998, then 14.2 percent in 1999, he said. The figure this year is expected to reach 22 percent.

In April this year alone, subscribers to China Unicom increased by 800,000, Yang said, adding that to date the company's mobile Telecom network subscribers had reached 10.1 million.

"The biggest advantage of our company is that we are the integrated telecommunications provider in the fast growing telecommunication market in the world," Yang said.

He said that China has the biggest population in the world and the market potential is huge, which is the reason why foreign investors are optimistic about Chinese telecommunications companies.

Mobile phone subscribers in China are expected to reach 68 million to 70 million by the year end, and the mobile phone penetration is 5.4 and 5.5 percent, according to Yang.

While in some Northern European countries, the penetration rate even has reached 60 to 70 percent. "Just image what a huge potential China is having for telecommunications development," Yang said.



People's Daily Online --- http://www.peopledaily.com.cn/english/