China Telecom Cos Shares Halted;Indus Overhaul Reports
HONG KONG -(Dow Jones)- Shares in some of China's major telecom operators were suspended from trade Friday following reports that Beijing will unveil a long-awaited telecommunications industry overhaul plan as early as Friday.
China Unicom and China Netcom Group Corp. (Hong Kong) said in statements to the stock exchange that their shares were suspended from trade pending a "price-sensitive" announcement.
Prior to the suspension, China Unicom shares had risen 12% to HK$18.48, while shares in China Netcom rose 12% to HK$27.05. The broader Hang Seng Index was down 0.5% at the midday break.
In Shanghai, shares in China United Telecommunications, which holds a stake in China Unicom and is the only listed telecom operator in the mainland, were also suspended. At the midday break, they were up 5.1% at CNY9.73.
"The timing of the launch of the overhaul is the market's focus. For the long-term view, all Chinese telcos will benefit from the restructuring," said Hu Jiaming, an analyst at Capital Securities.
Shares in China Mobile, the world's biggest mobile operator by revenue, fell 2.5% to HK$126.90 as of the midday break, on concerns that the industry restructuring might hurt its competitiveness.
The official Xinhua news agency reported Friday that Hong Kong-listed China Mobile will merge with fixed-line carrier China Tietong Telecommunications Corp.
Zhang Chunjiang, chairman of fixed-line carrier China Netcom will become vice president of China Mobile Communications Corp., Xinhua said.
Wang Jianzhou, meanwhile, will remain in his post as president of China Mobile Communications, the report said.
Separately, Chinese Internet portal Sohu IT reported Friday, citing telecom industry commentator Xiang Ligang, that China will restructure the country's five major telecommunications operators into three through M&A deals.
DBS Vickers Securities Ltd. analyst Steven Liu said he expects shares in some of the operators to continue to rise ahead of the anticipated restructuring announcement.
"China Telecom and China Netcom would catch up in valuation with China Mobile and China Unicom," said Liu.
He added that while China Mobile shares might be pressured in the short term due to concerns about its competitiveness, China Unicom shares may rise further on hopes that it may be able to sell its CDMA network, at a premium.
The market has been speculating that under the restructuring plan to be announced, China Unicom will sell its CDMA business to fixed-line operator China Telecom.
-By Lorraine Luk, Dow Jones Newswires; 852-2802-7002; lorraine.luk@dowjones.com
(Rose Yu in Shanghai contributed to this story.)
(END) Dow Jones Newswires
Posted to the site on 23rd May 2008
