Chinese fixed-line operator China Telecom (中國電信) is being forced to relaunch its dual stock listing plan after the international tranche of the offering drew a poor response from investors, a source close to the transaction said Thursday.
The company was scheduled to release pricing details Thursday for the multi-billion dollar dual listing in Hong Kong and New York.
It would now return cheques to Hong Kong investors who signed up for the domestic tranche of the listing, which closed on Wednesday, the source told AFP's financial newswire subsidiary AFX-Asia.
The domestic tranche is understood to have been fully subscribed.
"We will relaunch the deal no later than early next week," he said.
"At this stage, we have several regulatory hurdles to get through in Beijing, Hong Kong and New York over the next few days."
A second source said the delay was also due to an unfavourable take-up from international investors. The subscription period for the international tranche closed earlier Thursday.
"The company will need to handle some regulatory matters, which may be related to the hike of the IDD tariff [China Telecom] announced on Monday," the second source said.
On Wednesday, the state-owned fixed line operator announced the raising by up to 850 percent for its international direct dial (IDD) tariffs charged to overseas carriers.
At present, China Telecom charges 0.06 yuan (US$0.008) a minute for connecting mobile calls to its fixed-line network.
The move has prompted several Hong Kong telecoms companies to hike IDD calls to China by up to five times from Friday.
China Telecom had said the initial public offering (IPO) would comprise 16.8 billion H-shares or a 20 percent stake in the company.
It had given an indicative price of 1.48-1.71 Hong Kong dollars a H-share or US$18.97 to US$21.92 for each American depository receipt. Each ADR will represent 100 H-shares.
Assuming an issue price of 1.60 Hong Kong dollars an H-share, the company was expecting to raise 2.98 billion US dollars in its IPO on Hong Kong's stock exchange.
For the six months to June, the company recorded a net income of 8.48 billion yuan and forecasted earnings of not less than 16.50 billion yuan this year, it said.
It said the company's board had intended to recommend an annual dividend of HK$0.065 for each H-share in both 2002 and 2003.
After the IPO, China Telecom Group's stake in China Telecom would be reduced to 69.5 percent from the current 87 percent.
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