Electrical Equipment / Components & Telecoms

On August 20, China Telecom officially landed on A shares with the issue code "601728" and the issue price was 4.53 yuan per share. China Telecom opened at 4.79 yuan per share and rose 5.74%, and then the increase fell back, but it quickly rose to 16.34% at 10:50, triggering a temporary suspension. As of midday, China Telecom reported 5.39 yuan per share, an increase of 18.98%, with a turnover of 12.2 billion yuan and a market value of 425.6 billion yuan.

China Telecom announced that the total amount of funds raised from the issuance is estimated to be 47.094 billion yuan. If the over-allotment option of the A-share issuance is fully exercised, the net proceeds from the issuance will be 53.727 billion yuan. The fund-raising quota ranks fifth overall in A-shares, and is the largest IPO quota for A-shares in the past ten years.

The 5G project is the focus of this fundraising. The announcement shows that the funds raised this time will be used for 5G industrial Internet construction projects, cloud-network integration new information infrastructure projects, scientific and technological innovation research and development projects, of which the initial planned investment scale of 5G projects is 21.4 billion yuan.

China Telecom Group is the controlling shareholder of China Telecom. According to the announcement, the Telecom Group currently holds 57,377,055,317 domestic shares of China Telecom, accounting for 70.89% of the total share capital before the A-share issuance.

In this listing, China Telecom also introduced 20 strategic investors, covering large enterprises, industrial funds, and Internet companies, including the second phase of the National Integrated Circuit Industry Investment Fund, China State-owned Enterprise Structural Adjustment Fund, Huawei, Bilibili, and Anheng Information, Pearl of the Orient, Sangfor, etc.

According to the allotment agreement, Huawei was allocated 220 million shares this time at a cost of about 1 billion yuan. The four companies Bilibili, Oriental Pearl, Sangfor and Tianheng Information were all allocated 110.375 million shares, each costing 500 million yuan to subscribe. Bilibili announced its cooperation with China Telecom in areas such as IDC and cloud services, and user growth.

On the whole, the road to China Telecom's return to A listing has been settled in less than half a year. After being delisted in the United States, in March 2021, China Telecom announced its intention to apply for an A-share issuance and listing on the main board of the Shanghai Stock Exchange. In April, it signed the main board IPO counseling agreement on the Shanghai Stock Exchange and completed the counseling one month later. In July, the initial listing application was reviewed. Passed and completed the subscription and listing of new shares in August.

China Telecom is one of the three major operators in China. According to China Telecom’s first half performance announcement on the Hong Kong Stock Exchange on August 10, China Telecom achieved operating revenue of 219.2 billion yuan in the first half of 2021, and 193.8 billion yuan in the same period in 2020, a year-on-year increase of 13.1%, and a net profit of 17.7 billion yuan. Yuan, compared with 13.9 billion yuan in 2020, an increase of 27.2% year-on-year.

Recently, China Mobile's listing process has also pressed a clear accelerator key. At the financial report briefing for the first half of 2021, Yang Jie, chairman of China Mobile, said that China Mobile is expected to return to A smoothly within this year. On August 18, China Mobile officially pre-disclosed its A-share prospectus, and plans to be listed on the Shanghai Stock Exchange. It will publicly issue no more than 965 million A-shares and plan to raise 56 billion yuan, mainly for 5G-related projects.

Now that China Telecom and China Unicom have landed on A-shares, the day when A-shares gather the three major operators is expected to come soon. Zhongtai Securities stated that the A shares of the three major telecom operators will strengthen the market-based restraint and incentive mechanism, urge them to further integrate resources such as cloud network, edge, users, and talents, and build an open ecosystem through the introduction of strategic investors. Transformation and development. From the perspective of investment strategy, the communications industry represented by 5G is a sector with relatively small cumulative gains and higher valuations in the segment of technology stocks this year. Therefore, in the context of the stock index correction, it is expected to get active capital mining.