By Xie Fang
China Tower, the state-owned telecom tower builder, announced Tuesday that it would make its debut in the Hong Kong Stock Exchanges (HKEX) on August 8, which is expected to be the largest IPO in the Hong Kong stock market so far this year, according to a report by the 21st Century Business Herald.
According to the company's prospectus, China Tower plans to raise somewhere between HKD 54.3 billion and HKD 68 billion by issuing 43.115 billion shares at a price of somewhere between HKD 1.26 HKD 1.58 with 0788 as its stock code.
Meanwhile, ten companies, including the Hillhouse Capital Group which is one of the largest investment funds in Asia, Chinese e-commerce giant Alibaba, and China's largest oil and gas producer National Petroleum Corporation (CNPC), will act as China Tower's cornerstone investors to invest a total of around HKD 11.1 billion in the company.
The company specifies in its prospectus that the funds raised through its IPO will be used in building new base stations, upgrading supporting facilities, and paying off bank loans.
"Deleveraging is one of the major purposes of China Tower's IPO," noted a senior analyst in the telecom industry. "Since most of the company's assets were purchased from China's three largest telecom companies with borrowed money, the company aims to lower its debt level."
Tong Jilu, president of China Tower, also believes that the IPO will help the company reduce its leverage ratio and financial costs.
Since its establishment in 2014, the company has been enhancing its profitability with its operating revenue reaching RMB 68.66 billion in 2017.
However, analysts worry that the company's heavy reliance on China's three largest telecom companies, namely, China Mobile, China Unicom, and China Telecom, for its revenue growth will limit its growth potential. For now, over 99 percent of the company's operating revenue comes from serving these three telecom giants.
The good news is that the company has been taking steps to diversify its revenue sources. So far, it has forged partnership with more than 130 telecom companies both at home and abroad, including such big names as Huawei and Nokia.
