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Giant Telecoms IPO in Hong Kong Gets Weak Reception - Wall Street Journal - MVNO MVNE MNO Mobile & Telecoms industry intelligence
Tuesday , 16 July 2019
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Giant Telecoms IPO in Hong Kong Gets Weak Reception – Wall Street Journal

Giant Telecoms IPO in Hong Kong Gets Weak Reception – Wall Street Journal

Tong Jilu, chairman of China Tower, at a recent news conference in Hong Kong, where the telecoms tower company is listed.


jerome favre/epa-efe/rex/shutter/EPA/Shutterstock

Hong Kong’s biggest initial public offering in nearly two years drew a lukewarm response from global investors, casting some doubt on the prospects for other major coming listings.

China Tower Corp. priced its IPO at 1.26 Hong Kong dollars (16 U.S. cents) a share, the bottom of its target range, people familiar with the matter said Wednesday. The company, which calls itself the world’s largest telecommunications tower company by revenue, raised US$6.9 billion at a market capitalization of US$27.7 billion.

“Investors are obviously less enthusiastic towards old-economy companies,” said

Kevin Leung,

executive director of investment strategy at Haitong International Securities. China Tower’s business model wasn’t appealing to buyers looking for high-growth stocks, he said.

Investors have also turned more cautious on Chinese stocks due to an escalating trade conflict with the U.S. Hong Kong’s benchmark Hang Seng Index is down about 14% from a peak in January, and mainland benchmarks have also fallen. The pricing comes weeks after Chinese smartphone maker


priced a US$5.4 billion IPO, also at the low end of its range.

“To make an IPO work these days, companies…really have to be less aggressive in terms of valuation,” said Mr. Leung. He said prospective owners would otherwise prefer to see companies establish a track record in the secondary market before investing.

Future listings in Hong Kong could include Chinese startup Meituan Dianping. It applied in June to list in Hong Kong, and is targeting a valuation of more than US$60 billion, people familiar with the matter have said. However, the staid China Tower is a very different prospect from the fast-growing Meituan Dianping, which offers a range of services, from food delivery to hotel bookings.

China Tower’s IPO is still the world’s biggest since

Postal Savings Bank of China

US$7.6 billion debut in 2016, which was also in Hong Kong. Shares in the company, whose largest stockholders are China’s three main telecoms operators, are due to begin trading on Aug. 8.

Goldman Sachs


China International Capital

acted as joint sponsors, effectively the most senior banks on the deal. China Tower will use the proceeds to upgrade and expand its network, as well as repay debt.

Write to Joanne Chiu at joanne.chiu@wsj.com

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