After NYSE exit, China Mobile plots $7B Shanghai listing

China Mobile is planning a stock exchange listing in Shanghai that could raise $7 billion from domestic China investors.

The Chinese telecom heavyweight announced Monday it will issue 965 million A-shares, or up to 4.5% of its total stock, on the Shanghai Stock Exchange. It is also preparing an over-allotment option that would allow the issue of up to 15% more shares.

China Mobile and the two other state-controlled operators, China Unicom and China Telecom, were formally delisted from the New York exchange on Monday.

Figure 1: Window opens: After being unceremoniously delisted from the NYSE, China Mobile is planning a Shanghai comeback.
(Source: China Mobile)

An executive order by President Trump last November called for their removal on national security grounds. The three companies advised last week they had lost their appeals against the delistings.

They still trade on the Hong Kong Stock Exchange.

Home advantage

China Mobile is the largest Chinese telco by a long stretch, with 940 million mobile customers and 218 million broadband customers. In Q1, it accounted for 52% of telecom market revenue and 70% of the profit.

With market cap of $133 billion, it is the fourth largest operator in the world and the eighth largest Chinese public company.

The return to the China domestic exchange could have its upsides.

The listing of such a major stock, and in the context of its high-profile expulsion from the US, makes it bound to be well-backed by China government-linked funds as well as small investors.

That sentiment likely helped drive its HKSE share price 2.66% higher to HK$50.10 on Tuesday following the announcement.

If the A-shares were priced at that closing price, the offer would raise approximately $6.2 billion, or $7.2 billion if the over-allotment shares are issued.

Sharing economy

Significantly, the company also said the Shanghai listing would "see the introduction of strategic investors."

It did not elaborate but said this would help create "a new cooperative mechanism with complementary capabilities" and resources sharing, suggesting it will bring external partners onto its share register.

The company said the funds raised from the new issue would go to investment in 5G networks, cloud infrastructure, gigabit broadband and smart home.

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In March, China Telecom announced it will list on the Shanghai main board, with plans to offer up to 13% of its stock.

China Unicom has long been listed as a Shanghai A-share, with a current market cap of 134 billion yuan ($20.9 billion).

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— Robert Clark, contributing editor, special to Light Reading