Unicom readies China's biggest stock sale


China's mobile-phone market rivals the United States in size, though it hasn't settled on a standard technology

By Alex Frew McMillan CNN Hong Kong

HONG KONG, China -- China Unicom Group is preparing the largest stock offering in the history of China's nascent stock markets.

The group is the parent of China's second largest cell-phone company, China Unicom.

It hopes to get approval soon to sell around 12.5 billion yuan ($1.5 billion) in shares with an A share listing next year, probably on the Shanghai stock exchange.

China's A shares are open only to domestic investors, while its B share markets in Shanghai and Shenzhen are open to overseas stock buyers.

China's biggest companies used to look only overseas to raise capital, typically listing in Hong Kong and New York. But a trend to sell stock in China has gained pace in 2001, as regulators work hard to improve the quality and liquidity of markets.

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Overseas investors have been put off by a lack of transparency with Chinese listed companies, and domestic Chinese investors tend to be highly speculative, with surveys showing that many never hold stocks for more than a month.

China Unicom's offering would surpass the previous largest public offering in China. China's No. 2 oil company, Sinopec, raised 11.8 billion yuan in its August domestic stock sale.

China Unicom is already listed in Hong Kong and New York. It would use the money raised in China to develop a national mobile-phone network that uses the Code Division Multiple Access (CDMA) system.

China has not committed to a cell-phone technology standard, though the Global System for Mobile (GSM) technology is prevalent. Unicom already operates both CDMA and GSM mobile-phone services. CDMA is the dominant system in the United States, while Europe favors GSM.

China Unicom Group owns 77 percent of China Unicom, which has around 31 million customers. It will transfer some of its holding - probably 51 percent - into a separate company that it will sell off in the China stock offering.

China has around 130 million cell-phone users in all, served by Unicom and China Mobile. That means it rivals the United States as the world's biggest market.