Deloitte assists listing of China Telecom on Shanghai MB
The largest Shanghai MB IPO in nearly a decade
Deloitte China supported the listing of strategic client China Telecom Corporation Ltd. ("China Telecom", Stock codes: 601728.SH; 00728.HK) on the Main Board (MB) of Shanghai Stock Exchange on 20 August 2021. This was the largest IPO on Shanghai's MB in nearly a decade and one of the 10 largest IPOs in A-share stock market history as at year-to-date.
In its A-share offering, China Telecom offered 10.4 billion shares raising about RMB47.1 billion. Assuming the full exercise of its over-allotment option, the IPO could offer as many as 12 billion shares and raise up to RMB54.2 billion.
In this offering, China Telecom broke several A-share capital market records:
- The largest IPO on the MB of Shanghai Stock Exchange for nearly a decade and one of the 10 largest IPOs in the A-share capital market by funds raised* (year-to-date);
- The world's largest IPO year-to-date by funds raised*; and,
- The 1st non-financial corporation adopted over-allotment option for its offering in Shanghai MB.
*Excludes proceeds raised from exercise of the over-allotment option
About the IPO engagement
Deloitte China established a multidisciplinary professional services engagement team with members from Audit & Assurance, Technical and Risk Advisory and initiated work after China Telecom announced the start of its A-share offering preparations on 9 March 2021.
Using its vast industry experience and outstanding service capability, the engagement team delivered the highest quality of professional services to China Telecom during this engagement. Through collaboration and joint efforts with all of the intermediary organizations involved in the IPO, the engagement team assisted China Telecom to obtain listing approval documents from the China Securities Regulatory Commission at the end of July 2021. The company was debuted on the MB of Shanghai Stock Exchange on 20 August 2021.
About the clients
China Telecom is a large-scale integrated full-service integrated intelligent information services operator. It is committed to meeting customers' needs and uses applied scenarios to execute its "cloudification and digital transformation" strategy. It deploys 5G and the cloud as core technologies to build new information infrastructure and operate a support mechanism. It focuses on providing integrated smart information services to individual, family, government and corporate clients.
- China Telecom's personal communications and information services covers 351 million mobile users as of 31 December 2020. Its net growth in users has led the industry for three consecutive years. Its 5G package users have reached 86.5 million households and it ranks 1st in the industry with a penetration rate of 24.6%.
- As of 31 December 2020, China Telecom's family communications and information services serves 159 million wired broadband users. Its users are increasing steadily, with 116 million e-Surfing HD customers, 38.89 million households using its whole-home Wi-Fi service, and an e-Surfing Webcam user base of 8.84 million households. Its smart family business is growing rapidly and the penetration rates continues to rise.
- In communications and information services for government and corporate clients, E-Surfing Cloud ranks 1st among global IaaS public cloud operators and has the highest revenue of any such operator in China. It is also the country's largest Internet Data Center services provider.
Source: Prospectus of initial public offering (A Shares) of China Telecom Corporation Limited (6 August 2021).
Background and significance of the engagement
China Telecom was dual-listed in Hong Kong and the US in 2002. The New York Stock Exchange initiated the delisting of the American Depository Receipts of three Chinese telecommunications operators in January 2021. In March 2021, China Telecom announced its return to China's capital market. China Telecom's return listing is a clear demonstration of the success of reform of the A-share capital market and the attractiveness of its abundant liquidity. The market's strength is backed by continuous reform and improvements in regulatory supervision, the ongoing expansion in its investment community, and the sustained enhancement of A-share fundraising capabilities. This IPO lays solid foundations for more return listings of major Chinese corporations in the A-share market in future.
Deloitte China congratulates China Telecom on its listing on the MB of Shanghai Stock Exchange. We will continue to provide high quality professional services to assist more clients to take one step ahead in today's increasingly competitive and complex business environment.
Please stay tuned for more exciting listing news of from our clients.
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