China Tower raises $9.4b in IPO priced at low end

43.1 billion new shares sold at HK$1.26 each, in world's biggest listing in two years

HONG KONG • China Tower Corp has raised US$6.9 billion (S$9.4 billion) after pricing its initial public offering (IPO) at the bottom of an indicative range, four people close to the deal said yesterday, in the world's biggest listing in two years.

The world's largest telecoms tower operator sold 43.1 billion new shares, or 25 per cent of enlarged share capital, at HK$1.26 each, valuing the firm at about US$28 billion, the people told Reuters. The top of the range was HK$1.58.

The float is widely seen as a test of Hong Kong's IPO market as investors consider several large deals at a time when the benchmark Hang Seng Index is down about 14 per cent from its January peak. It also comes as China's economy has begun to lose growth momentum amid a government push to reduce debt and an escalating trade conflict with the United States.

China Tower declined to comment on the pricing. The people declined to be identified as the information was not public.

China Tower's IPO will become the world's biggest listing since Postal Savings Bank of China Co's US$7.63 billion float in Hong Kong in 2016.

China Tower operated 1.9 million tower sites and had 2.8 million tenants at the end of June. It plans to use 60 per cent of the IPO proceeds to build towers and update existing ones, as it accelerates fifth-generation (5G) network construction. It will use the remainder for loan repayment and general working capital.

Chairman Tong Jilu told a news conference in Hong Kong last week that the state-controlled firm would continue to invest in 5G-related business that "can bring exciting new opportunities".

The float is also the latest amid a government push to inject new life into bloated state-owned enterprises by encouraging private capital investment in such enterprises.

China Tower's IPO price represents a multiple of 7.1 times adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) for this year, and 6.5 times its 2019 Ebitda, as forecast by its underwriting syndicate. The firm secured US$1.4 billion from 10 cornerstone investors including Chinese investment firm Hillhouse Capital Group, US fund firm Och-Ziff Capital Management Group and a unit of Alibaba Group Holding, covering 20 per cent of the IPO.

The company was formed in 2014 from the tower operations of China's three state-backed telecoms providers - China Mobile, China Telecom and China Unicom - to reduce duplication.

Its operating revenue last year rose nearly 23 per cent to 68.7 billion yuan (S$13.8 billion), while profit rose more than 25 times to 1.9 billion yuan, the IPO prospectus showed. Its three telecoms shareholders contributed almost all its revenue last year.

Its shares will start trading on Aug 8.


A version of this article appeared in the print edition of The Straits Times on August 02, 2018, with the headline 'China Tower raises $9.4b in IPO priced at low end'. Print Edition | Subscribe