Nearing a year since its exclusion from Wall Street, China Mobile, the largest telephone operator in the Asian giant, has received the green light from Beijing regulators for what is shaping up to be the largest IPO in Shanghai. in more than a decade. The initial public mega-offer of the state telephone company – which, together with that of China Telecom in August, would yield a total figure of some 15,349 million euros on the Chinese stock market – is yet another example of Beijing’s efforts to motivate the big tech giants to be listed on the mainland China stock market.
According to a document presented Monday night to the Hong Kong Stock Exchange, where China Mobile is already listed, the phone company has obtained the backing of the China Securities Regulatory Commission (CSRC) to issue shares. nationals in renminbi (referred to as “series A shares”). In the statement published this Tuesday by the Hong Kong exchange itself, the company adds that it plans to sell 845.7 million titles in the country’s economic capital, 3.97% of the firm’s total, although the figure could increase to 972, 5 million through an overallotment option.
At the moment it has not been made official when it will debut in Shanghai, although the CSRC has given its authorization for the launch to take place over the next twelve months. Although the market price of the shares is still unknown – China Mobile has notified that it will be decided throughout this week – Bloomberg estimates that shares worth 4,400 million euros will go public. However, everything indicates that the figure will be higher, since in the stock markets of the mainland of China (Shanghai, Shenzhen and the newly created Beijing) stocks tend to appreciate more than on those on the other side of the border.
China Mobile already revealed in August that it intended to obtain some 56,000 million yuan (7,800 million euros) with the operation, a figure with which it would position itself ahead of what had been the largest initial public offering in recent years, that of the main Chinese chipmaker Semiconductor Manufacturing International Corporation, which in July 2020 brought in 53 billion yuan (7.41 billion euros). It would also exceed the 47.1 billion yuan (6.56 billion euros) raised in August by the second largest state operator in the country, China Telecom, also expelled from the New York Stock Exchange in January.
Everything indicates that China Mobile could be the largest exit in the Shanghai market since that of the Agricultural Bank of China in 2010, of about 68.8 billion yuan (9.582 million euros, at the current exchange rate). The debut of the world’s largest mobile phone operator by number of subscribers would also be among the ten with the highest volume, along with the large national banks and the energy giant PetroChina.
The company announces in its proposal that most of the proceeds in the Chinese financial center will go to the expansion of 5G networks, although there will also be items for the infrastructure of resources in the cloud and for smart home projects and technological development. valued at about 157,000 million yuan (21,868 million euros). China is building the world’s largest 5G network and has ambitions to be a leader in the race towards 6G (with its three major operators at the forefront of this movement) and the Metaverse (with the country’s leading video game developers, Tencent and NetEase , openly willing to advance in this area).
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According to a report by the Hong Kong Stock Exchange published on Tuesday, China Mobile estimates that its net income will increase between 6% and 8% year-on-year, reaching between 114.3 billion yuan (15.92 billion euros) and 116.4 billion yuan. (16,213 million euros).
The increase in tensions between Beijing and Washington has caused the United States to tighten the requirements for Chinese companies that want to list on Wall Street. The new regulations have put an end to a trend that began at the beginning of the century, when some of China’s leading technology and telecommunications firms decided to trade their shares on the US stock market.
The New York Stock Exchange suspended the business activities of China Mobile, China Telecom and China Unicom in January, after the previous US Administration, led by Donald Trump, prohibited investment in companies that it considered were associated with and even controlled by the Chinese Army. The measure brought with it a domino effect, which caused them to also be eliminated from the main international stock indexes. Despite appeals filed by those three companies after Trump left office, New York trading authorities ratified his exclusion in May, and the Joe Biden government has kept the three Chinese phone companies on the blacklist.