Unicom Shares Climb on Report of Industry Overhaul
China Unicom Ltd., the smaller of the nation’s two mobile-phone operators, rose to the highest in more than two months in Hong Kong trading after a newspaper said the government completed plans to combine state-owned carriers.
The Beijing-based carrier rose 6.1 percent to HK$18.58 as of 11:49 a.m., the highest since Oct. 30, bringing its two-day gain to 14 percent. The stock has climbed 41 percent in the past six months on speculation Unicom will be bought out as part of plans to break up the phone company.
China’s ruling Communist Party has agreed on a plan to sell China Unicom’s two networks to fixed-line companies China Telecom Corp. and China Netcom Group Corp., the South China Morning Post reported today, citing unidentified people. Under the plan, market leader China Mobile Ltd. would combine with China Tietong Telecommunications Corp., the newspaper said.
“We have had these rumors many times before, and the important thing is to identify where they come from,” said Marvin Lo, a telecommunications analyst at Daiwa Institute of Research in Hong Kong. “The rumors have driven up the shares of China Telecom, Unicom and Netcom in the past few days.”
China Mobile, the world’s biggest wireless carrier by users, fell 1.1 percent to HK$133.60, as China Telecom declined 3.7 percent to HK$6.74 and China Netcom fell 0.2 percent.
Takeover Price
Any acquisition of China Unicom’s wireless networks will likely be at a price higher than the current share price, said Steven Liu, an analyst at DBS Vickers Ltd. in Hong Kong.
“The premium in a China Unicom acquisition may not be as high as everyone’s expectations,” Liu said by telephone. “These carriers are all state-owned and so the principles of international, market-based acquisitions may not apply.”
The DBS analyst rates China Unicom “hold.” Daiwa’s Lo rates China Unicom and China Telecom shares “outperform,” Netcom “hold” and shares of China Mobile “buy.”
China Mobile spokeswoman Rainie Lei, Unicom spokeswoman Sophia Tso, Netcom spokeswoman Xu Song, and Wang Lijian, spokesman for China’s Ministry of Information Industry, declined to comment on the report. China Telecom spokesman Jacky Yung said the company hasn’t received any notices from the government on any industry restructuring.
Tietong Telecom runs phone networks covering China’s railways.
Management Changes?
China, the world’s biggest mobile phone market, is home to more wireless subscribers than the combined populations of the U.S., U.K., and Japan. The nation added 7.9 million wireless subscribers in November for a total of 539.4 million, according to government data.
The reported government plan “is a highly anticipated and welcome decision,”Citigroup Inc. analysts Michael Meng and Anand Ramachandran wrote in a report to clients today. “Everyone should benefit, in our view.” The analysts recommend buying China Unicom shares.
A management reshuffle is expected to be part of the nation’s phone industry revamp, according to the Morning Post today. Vice-minister of the Ministry of Information Industry Xi Guohua will become chairman of China Mobile, replacing Wang Jianzhou, who will retire, the newspaper said.
Netcom Chairman Zhang Chunjiang will move to become the head at China Telecom, replacing Wang Xiaochu, who will head the ministry, the newspaper reported. Unicom Chairman Chang Xiaobing will move to head Netcom, the Morning Post said.
Tags: China-Mobile, China-Netcom, China-Telecom, China-Unicom