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Original title: The proposed issuance of 12.1 billion shares listed on the Shanghai Stock Exchange, China Telecom re-listed in A shares, reveals its ambition.
Our reporter Li Qiaoyu
Another great company is about to return to A shares!
On the evening of March 9, China Telecom issued an announcement stating that to seize opportunities for digital development, improve corporate governance, expand financing channels, accelerate reform and development, promote strategic implementation and achieve high-quality development, the company plans to publicly issue no more than 12.09 billion A shares. Shares are listed on the main board of the Shanghai Stock Exchange.
Based on China Telecom’s closing price of HK $ 2.68 per share on the Hong Kong stock market on March 10, China Telecom’s return to equity financing this time may reach HK $ 27.1 billion. yuan.
“China Mobile has not yet returned to A-shares. China Unicom has different listed entities on the A-share and Hong Kong markets. Therefore, if China Telecom returns smoothly to the A-share market, it will become the first telecom operator among the top three operators to achieve the ‘A + H’ list. Business, “Fu Liang, an independent analyst in the communications industry, told a Securities Daily reporter.
Best time to return to A shares
China Telecom may usher in a better time to return to A shares.
“This is currently a rare period of strategic opportunities for the development of the company.” At the performance briefing held by China Telecom a few days ago, China Telecom Chairman Ke Ruiwen said publicly: “The company discusses and exchanges issues related to the issuance of A-shares with the capital market every year. The council The approval of the plan at this time is primarily due to the in-depth research and judgment that the company adheres to the cloud-to-digital transformation strategy (i.e., cloud-network integration transformation, digital transformation), and the issuing A shares is an appropriate decision to make when the company develops. “
In Ke Ruiwen’s view, current development opportunities are very rare. The funds raised from the A actions will be used mainly for technological innovation and research and development, Industrial Internet 2B and the improvement of new infrastructure capabilities, especially cloud and cloud network integration. and 5G development. These are all important issues that China Telecom should pay close attention to and affect the future development of the company, and they are also the key content of the company’s strategy.
Pan Helin, executive dean of the Institute of Digital Economy at Zhongnan University of Economics and Law, told the “Securities Daily” reporter that China Telecom is now in the best time to return to A. On the one hand, the construction of 5G requires a large amount of capital costs. Although it is jointly built and shared with China Unicom, there is still a funding gap. Return to A-share listing may add a new financing channel for China Telecom; On the other hand, China Telecom is entering a new During the growth period, 5G will bring human society from the Internet to the Internet of things, and access equipment will explode further. At this time, telecom operators must invest more funds in new business formats to invest in research and development and market expansion.
“From the perspective of the capital situation of the three major carriers, only China Mobile has relatively sufficient funds. Therefore, China Telecom wants to increase its 5G build, develop more 5G applications in the future, and better implement data transfer in the cloud. “The strategy requires a lot of funds.” Fu Liang told reporters: “Through the listing, China Telecom’s equity will be more abundant and the debt-to-equity ratio will decrease in the future, which it will also promote improvement. performance “.
Be strengthened through capital operations
This is not the first time that China Telecom Group has announced the company’s listing. Not long ago, China Telecom’s Yipay also publicly stated that it plans to launch an initial public offering this year.
In addition, China Telecom’s foreign investment is also relatively active. On March 9, 2021, China Telecom announced a strategic investment in ZStack. Moving forward, the two sides will focus on growing and building localized cloud platforms and ecology, and will open up the platforms and gateways for companies’ digital transformation. In the fourth quarter of 2020, China Telecom announced that it will spend 1.768 billion yuan to acquire 18.68% of the shares of Chenan Technology held by Tsinghua University, becoming the majority shareholder of Chenan Technology and making efforts in the urban security field.
According to data from Tianyan Check, China Telecom has made a number of foreign investments, including investments in Xiong’an Cloud Network Technology Co., Ltd. (with 49% shares), Tianyi Zhilian Technology Co., Ltd. (with 35% participation). shares) and Beijing Liufen Technology Co., Ltd. Company (17.86%) and Digital Guangdong Network Construction Co., Ltd. (with 16.5%), etc.
“China Telecom plans to introduce some strategic investors by going back to A shares, and is likely to take this opportunity to introduce investors in the upstream and downstream 5G industry chain to promote 5G application deployment and cloud-to-digital transfer project. … “In Fu Liang’s opinion,” This is far beyond the original field of the ‘communication circle’, giving the originally relatively unpopular ‘communication circle’ more room for imagination. “
Wang Zhengnan, a senior observation expert in the communications industry, revealed to the “Securities Daily” reporter that it would be difficult for the top three operators to substantially increase their revenue. Therefore, China Telecom hopes to build the entire related industry chain through investment. and mergers and acquisitions. After China Telecom is listed on the A-share market, the above trend of frequent foreign investment may continue. Related companies with vertical influence and technical advantages are expected to become China Telecom’s investment targets.
“If you want to break the siege, you can only jump out of this field and focus on the core business to improve competitiveness in the fields of smart city, information security, cloud network construction, etc., and form a differentiated advantage. . “In Fu Liang’s opinion, in the field of mobile communications, China Telecom has difficulties. It competes with China Mobile, in the field 5G, it is equally difficult for China Telecom to compete with China Mobile.”
“China Telecom has embarked on a path to increase capital through mixed reforms, strengthen its own asset strength through equity operations, and reinvest in upstream and downstream industries to improve competitiveness.” In Fu Liang’s view, this is what the China Telecom team found can enable China Telecom One way to compete with China Mobile.
China Telecom’s return to the A-share listing may be just the beginning. “In fact, China Mobile had the idea to go back to A shares more than ten years ago, but it has not been traded due to factors like politics and the environment. Fu Liang told reporters: “At present, China Mobile is not so much in terms of financing. Otherwise, whether to return to the A list depends on their own considerations. However, some subsidiaries may seek initial public offerings for the independent development “.
