The state-owned fixed-line giant had hoped to raise roughly $3.68bn through the issue of 16.8 billion shares, or around 20% of total equity, at a price between HKD 1.48 and HKD 1.71 ($0.19 and $0.22). However, the turbulent market and weak appetite for telecom stocks forced the carrier to postpone its IPO last week.
China Telecom hopes its relaunched offer will raise up to $1.66bn, if sufficiently subscribed. But this is by no means certain. Those investors who originally expressed interest in the shares may well stay away again, even from the downsized offer, given that demand elsewhere has been shown to be weak. The revised offer now represents about 10% of China Telecom’s enlarged share capital.
Some analysts had speculated that the carrier would be forced to lower its price range to draw interest, but this seems unlikely as Beijing forbids the sale of state assets at below book value. The cheap end of the indicated price range is only slightly above the carrier’s book value.
