Does China Telecom Speed Up The Pace Of Returning To A, And Three Major Operators Or A-Share Join Hands?

China Telecom is speeding up its pace of returning to a.

According to the news on March 17, following the announcement on March 9 that it intends to apply for A-share issuance and listing on the main board of Shanghai Stock Exchange, China Telecom announced the new progress of return a in the Hong Kong stock exchange again: the company proposed to issue RMB common stock (a share) for the first time and list on the main board of Shanghai Stock Exchange.

According to the announcement, the company will hold a special general meeting of shareholders, a meeting of domestic shareholders and a meeting of H-share shareholders on April 9 to discuss issues such as the initial public offering of RMB common stock (A-share) by China Telecom Co., Ltd.

It is not only China Telecom's action, but also China Mobile's a action. On March 16, a person familiar with the matter disclosed that China Mobile was considering going back to the A-share market. However, the 21st century economic reporter learned from China Mobile that there is no new news from China Mobile.

"At present, it is the most appropriate time to return a telecommunication." In an interview with the 21st century economic reporter, pan Helin, executive director of the Digital Economy Research Institute of Central South University of economics and law, said, "in addition to the delisting of the United States, the telecommunications industry itself is entering the 5g era, and China's telecom business is expanding from fixed line business to mobile internet field. This is the new growth period of China Telecom."

Overseas return of operators

According to the announcement of China Telecom, the number of a shares issued this time will not exceed 13% of the total issued share capital after the issuance, that is, no more than 12.093.3 billion shares. The company may authorize the lead underwriter to exercise the over allotment option under the conditions of laws and regulations and supervision, and over sell a shares not exceeding 15% of the A shares issued this time.

According to China Telecom, the IPO will be used for the company's main business related projects, including 5g industrial Internet construction project, cloud network convergence new information infrastructure project and scientific and technological innovation research and development project. In the next three years, the initial investment amount of raised funds will be 11.4 billion yuan, 27 billion yuan and 16 billion yuan respectively.

Among them, in terms of 5g industrial Internet construction project, China Telecom said that it would focus on investment and construction of 5g industrial Internet related wireless network, core network, MEC, bearer network, etc., to create a new type of information infrastructure with agility, intelligence, security, credibility and self-control, and provide end-to-end customized services for customers in key industries.

Some insiders of China Telecom said that the return to a is not only a financial problem, but also a strategic change of China Telecom.

"5g is essentially different from the previous four generations of mobile communication. The previous communication technology was basically aimed at C-terminal, while 5g was mainly aimed at b-terminal. Therefore, we must seize this strategic opportunity period and carry out major reform." "We have determined the strategy of" changing cloud to digital conversion "and hope to better implement our strategy through A-share listing," the above-mentioned person disclosed

It should be noted that, almost at the same time as China Telecom announced the process of returning to a, China Mobile also heard the rumor of returning to a. It is pointed out that China Mobile is considering A-share listing after delisting in the United States, but the source also pointed out that the listing plan is at an early stage.

This means that once China Telecom and China Mobile successfully return to a, and China Unicom, which has been listed on the main board, the three operators will merge into a shares.

"China Telecom's return to a calls for the return of overseas state-owned enterprises, and China Mobile should follow suit." Pan Helin told the 21st century economic reporter that all kinds of signs indicate that telecom operators are seeking a new round of expansion. "5g will bring human society from the Internet to the Internet of things, and access devices will further explode. At this time, telecom operators need to invest more money in new business forms to carry out research and development and market expansion."

Hong Kong stock telecommunications sector downturn

Why should China Telecom and China Mobile return to a shares from overseas? This is probably related to the current environment.

Previously, China's three major operators were listed in Hong Kong and New York at the same time, and China Unicom was also listed on the mainland's a shares. However, on December 31, 2020, China Mobile, China Telecom and China Unicom received the notice that the US side was "expelled" from the US stock market. Although the three operators protested and dissatisfied with this, they still could not change the results.

From another point of view, the current three major operators are also undervalued overseas. According to the latest financial report data disclosed by China Telecom, the company's operating revenue will reach 393.561 billion yuan in 2020, with a year-on-year increase of 4.7%, and the profit attributable to shareholders of listed companies will reach 20.85 billion yuan, with a year-on-year increase of 1.6%, and the net profit per share is 0.26 yuan. The financial situation and operation situation are relatively optimistic.

In terms of share prices, however, it is less optimistic. As of the delisting of us shares, China Telecom's value in US shares was US $21.41 billion, while in Hong Kong shares, as of March 17, China Telecom's share price was HK $2.64, valued at HK $213.7 billion, with a P / E ratio of only 8.582 times.

Before the delisting of China Mobile's US shares and the latest Hong Kong stock valuations were US $112.7 billion and HK $1.1 trillion, with P / E ratios of only 7.533 and 8.619 times.

Previously, China Galaxy Securities said that the communications industry index has been declining since it reached its peak in July 2020 and remained weak in the first week of 2021. "Combined with the previous statement of the Ministry of industry and information technology, China will build more than 600000 5g base stations in 2021, and the bottom line expression gradually increases the industry certainty. We believe that the delisting of the three major operators in the U.S. stock market may stimulate investors to pay attention to the fact that the current valuation of the communication industry is low. In combination with the expectation that the marginal situation will gradually improve in the future, the timing for the allocation of the communication industry has come, and the market may be about to start the bottom up repair process. "

Pan Helin also believes that the valuation of China Telecom in Hong Kong and US stocks is not high, and the long-term profits are stable. It is expected that the A-share telecom sector will become a representative sector.