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Jitong Eyes Domestic Capital Mart
Jitong Communications recently turned its eyes to the domestic capital market after postponing its overseas listing due to the downturn on international stock markets, acoording to China Daily report.
As one the country's six licensed basic telecoms operators, Jitong soon got warm responses on the domestic market.
The Jinzhou Port Co, a public company listed on the Shanghai Stock Exchange, said in a recent statement that it would spend 588.8 million yuan (US$71.14 million) on a stake in Jitong.
Jinzhou Port said it planned to buy 294.4 million shares in Jitong at a price of 2 yuan (US$0.24) per share to supplement its core port operating business.
The shares are now owned by the Beijing-based leading television tube maker Cai Hong Group Crop, the corporate parent of the Cai Hong Display Co.
The firms have already signed an agreement on the share acquisition, said the statement.
Jinzhou Port said it would pay for the shares from its capital reserves if the plan were approved at a shareholder meeting scheduled for May 28, it said.
Its planned stake would account for 14.72 per cent of Jitong's expanded registered capital, the statement said.
Jitong, which now has a registered capital of 417.4 million yuan (US$50.4 million), plans to expand this to 2 billion yuan (US$242 million).
Jinzhou Port is 27 per cent owned by private trade firm Orient Group Co, based in the northeastern province of Heilongjiang and the corporate parent of the Orient Co.
If the deal is settled, Orient Group would be the first private firm to indirectly own a stake in a State-owned telecoms company.
China's basic telecoms market is closed to both domestic private companies and overseas investors for direct investment.
But as a result of the impending WTO entry, the ban is quietly loosening. After China Mobile and China Unicom went public in New York and Hong Kong, foreign capital has entered the telecom sector in different ways.
Vodafone, the world's top cellular telecoms operator, now holds 2 per cent of China Mobile's shares after a stock swap.
Media giant News Corp and US investment bank Goldman Sachs bought shares in China Netcom in a recent private equity acquisition.
Set up in 1994, Jitong is the country's smallest telecoms operator and focuses on Internet protocol telephone and data communications services.
Jitong had planned an initial public offering through a dual listing on NASDAQ and Hong Kong's second board last November, but the initial public offering was called off because of turbulent global technology and telecommunications markets.
Jinzhou Port said that investing in a national telecoms company would help it diversify its business range and earn more profits from the rapidly growing telecoms market.
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