China Mobile gets green light for blockbuster $9B Shanghai IPO

China Mobile is moving quickly to hold its blockbuster Shanghai IPO after approval from the securities regulator this week, paving the way for one of the telecom industry's biggest-ever floats.

It will hold an online roadshow for investors next week, making it likely it will complete its return to the Shanghai exchange in the first quarter of 2022.

The Chinese giant is seeking to raise 56 billion yuan (US$8.8 billion), which would make it the biggest mainland China IPO in the past ten years.

Figure 1: Up for sale: China Mobile is moving full speed ahead to IPO.
(Source: Sipa US / Alamy Stock Photo)

It has forecast full-year income of 107.3 billion to 109.3 billion yuan, an increase of 5%-7%, on revenue of 844.9 billion to 852.6 billion yuan, up 10%-11%.

Funds raised will go toward construction of 5G networks, cloud infrastructure, gigabit broadband, smart home and R&D for "next-generation IT and digitalized and intelligent ecosystems," the company said.

Finding alternatives

Rival China Telecom raised 47.1 billion yuan ($7.3 billion) when it floated in August, well-backed by state-owned companies as well as Huawei, which acquired nearly 1 billion yuan in stock.

The three telcos were among 31 Chinese firms delisted from the New York exchange early this year under a directive from the Trump Administration that cited their close military links.

China Mobile was one of the earliest Chinese companies – and the first telco – to go public when it listed in Hong Kong and New York in 1997, raising $4.2 billion and blazing a path for other state-owned entities to follow.

Reflecting the times, the purpose was to expose its management to global financial market disciplines as well as to raise cash.

Bigger picture

The exodus of Chinese firms from the US captures the tenor of the current era, where the glow of global cooperation has been displaced by the mutual suspicion of geopolitical rivalry.

Chinese authorities have been taking their own steps to decouple from the US, regarding any foreign-listed firm with huge volumes of personal data as a security vulnerability.

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Ridesharing market leader Didi Global last week became the latest to delist from the NYSE. Tech leaders like Alibaba and Baidu that remain on US exchanges will continue to come under pressure to follow Didi's example.

China Mobile's imminent Shanghai listing, while large, is still well short of the biggest telco IPO. NTT DoCoMo's $18 billion NYSE debut in 1998 remains the largest and the fifth-biggest IPO of all time, followed by Deutsche Telekom's $13 billion 1996 listing.

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— Robert Clark, contributing editor, special to Light Reading