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China Unicom's lower-than-expected listing price won a warm welcome from domestic stock investors. Their positive attitude partly wiped away the gloomy atmosphere around the company's initial public offering (IPO).
The country's second largest mobile carrier Tuesday announced a share price of 2.3 yuan (28 US cents) for its pending IPO in the domestic stock market. China Unicom will issue 5 billion shares and raise 11.5 billion yuan (US$1.4 billion) in the IPO.
The announcement eased the anxiety of domestic investors, who were worried that China Unicom's IPO might dry up the domestic capital well.
Earlier reports had said that China Unicom might raise 20 billion yuan (US$2.4 billion) in the IPO at a price of 4 yuan (48 US cents) per share.
This trial balloon evoked strong negative response in the capital market with the indices of China's dual stock markets turning south.
"China Unicom is trying to woo investors with a relatively cheap IPO price. The price of 2.3 yuan helped consolidate the stock markets," said Wang Mingde, director of Guodu Securities' research division.
China's dual stock markets, in Shanghai and Shenzhen, climbed modestly Tuesday by 0.79 points and 3.96 points.
From an investor's point of view, China Unicom is a good buy, Wang said.
China Unicom, a Hong Kong and New York listed company, is the first telecom carrier to be listed in the domestic bourse. The shares will be traded in the Shanghai Stock Market in October after the National Day holidays.
Ye Jia, a 25-year-old stock investor in Beijing, said he would buy shares of China Unicom because, in comparison with most of the other listed companies, China Unicom has a higher revenue growth rate and rich market potential.
China Unicom reported a 21.2 percent yearly revenue growth from 243.2 billion yuan (US$29.3 billion) in 1999 to 357.2 billion yuan (US$43 billion) in 2001.
Although China Unicom's CDMA (code division multiple access) operation, target of the money raised in the IPO, still has many uncertainties, Ye said many individual investors, including himself, hold positive expectations.
"China Unicom needs the IPO to fill the capital gap so it can develop its CDMA operation," said Feng Lei, information technology analyst at Beijing Securities.
The company is betting on CDMA. The network swallowed over 20 billion yuan (US$2.4 billion) in the first-phase construction, so the company has to go ahead, Feng said.
China Unicom is among the few, if not the only one, that operates two mobile networks at the same time. The potential competition between the two networks, GSM (global system for mobile communications) and CDMA, will eventually become a serious problem dampening the company's development, said Kan Kaili, director of the Information Industry Policy and Development Institute at the Beijing University of Post and Telecommunications.
He urged the company to pay more attention to the competition between the two networks and the consequent influence this will have on the capital market.
US-based Qualcomm, the major CDMA patent holder, is among the benefit earners in China Unicom's successful IPO. The more China Unicom invests in CDMA, the more Qualcomm will earn in the form of patent royalties.
"We're obviously very pleased that China Unicom's share offering went successfully," said Rich Sulpizio, president of Qualcomm China, "We're confident that the coming rollout of CDMA1X and the wireless data services it enables will continue to drive the success of Unicom's CDMA network."
（China Daily September 18, 2002）
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