July 1, 2004
The shareholders of ZTE Corp. have approved a proposed listing on the Hong Kong stock exchange, according to a statement released to Chinese business newspapers earlier today.
The Chinese equipment firm, which is already a public company listed on the Shenzhen stock exchange, plans to complete the listing of no more than 20 percent of its current outstanding shares in the first half of 2005. In the statement, reported Dow Jones, ZTE said most of the funds raised, about 60 percent, will be used for international expansion, while the remainder will be poured into R&D. It's unknown how much ZTE hopes to raise from the placement.
The announcement sent ZTE's share price up by 0.88 Renminbi, nearly 5 percent, to RMB21.22 ($2.56) on the Shenzhen exchange.
ZTE staff in China could not be reached for comment, while its European spokesperson was unavailable.
This isn't the first time ZTE has planned a Hong Kong listing, though. Shareholders approved an "overseas IPO" in August 2002 (see ZTE Plans IPO), but the plan was put on ice in April 2003 because of worsening market conditions. In March this year, ZTE press officer, Rena Qin, told Light Reading in an email that, "ZTE has never stopped seeking international financing channels for its expanding overseas business," though she added that any plans for an international IPO hadn't been discussed at that point.
Clearly ZTE believes the market has turned, and that it needs an overseas listing -- i.e., on an international exchange -- to help with its international aspirations. Its 2003 financial results showed a net income of RMB752.5 million ($91 million) and a doubling of international revenues (see ZTE Reports 2003 Earnings and ZTE Doubles International Revenues). Those international revenues have tended to come from regions other than Western Europe and North America, but there is strong evidence that ZTE is playing a major role in next-generation RFP processes at leading Western Tier 1 carriers (see BT Moves Ahead With Mega Project, ZTE Builds Uzbekistan IP Backbone, ZTE Wins Phillipines VOIP Project, ZTE Wins in Tunisia, and Chinese Look to India Win).
ZTE isn't the only Chinese vendor with overseas IPO plans. Huawei Technologies Co. Ltd., currently privately held, has hinted at plans for an IPO in the U.S., but had said there is no timetable for such an event (see Huawei's US Aspirations on Hold).
And those plans might be pushed even further out, following the alleged industrial espionage incident at Supercomm (see Will Spying Charges Hurt Huawei?).
— Ray Le Maistre, International Editor, Boardwatch
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