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The China Telecom (Hong Kong) IPO: Money for Nothing?  
Product Ref: 99/29C Company: China Telecom

Product Type: Case Industry: Telecommunication Services

Related Product(s): Teaching Note
When China Telecom (Hong Kong) (CTHK) went public in October 1997 it was Hong Kong's largest ever initial public offer (IPO). Amidst a turbulent economic environment, CTHK's listing was oversubscribed by an impressive 30 times and raised almost US$4 billion. The listing of CTHK was 'sold' to the international community as a China 'telecoms play' and the start of China's privatisation program. But neither of these positions was accurate. Despite being in the midst of one of the world's largest telecommunications programs, China retained a complete ban on foreign direct investment in the telecom services sector. Foreigners were allowed to neither own nor operate public networks of any kind in China. So what then had they bought with US$4 billion of investment? How had China Telecom managed to sell a minority stake in one of its operational companies without actually selling any control?
Functional Area : Finance & Investments
Strategy & General Management

Issues: Financing, Capital Formation, Market Reform
Length: 18 pages Country: China (People's Rep. of)
Hong Kong SAR

Pub. Year: 1999 Level of Difficulty: 1
This product type is available in the following language(s):      English
Related Information: N/A
This case is UGC funded.
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