China Tower made its trading debut in Hong Kong on Wednesday and the stock ended unchanged from its IPO price, extending the trend of lacklustre debuts and raising questions about investors’ appetite for high-profile tech listings.
The company, which operates the telecommunications towers for the world’s biggest cellular phone networks, raised at least HK$54.3 billion (US$6.9 billion) in its IPO, making it the largest global offering since Postal Savings Bank of China raised US$7.6 billion in 2016.
The sluggish start of the stock follows disappointing performance of shares of Chinese smartphone giant Xiaomi, which debuted in Hong Kong last month and now at almost the same level as its IPO price. Chinese e-commerce company Pinduoduo, which listed in New York two weeks ago, jumped on the first day but has since struggled to sustain the momentum.
The market sentiment could pose a challenge to another major tech IPO in Hong Kong expected later this year by Chinese on-demand services startup Meituan, which could be valued at $60 billion in the listing.
China Tower was formed in 2014 through the merger of the transmission operations of China Mobile, China Unicom and China Telecom. The three mobile carriers together own more than 90 per cent of China Tower, and also contribute 99 per cent of its revenue.
As a key part of China’s ambition to implement a 5G network as early as 2020 and lead a global race, China Tower plans to build more base stations in the country, Tong said on July 24.
But that has raised concerns among investors about China Tower’s cash flow, as the construction requires large amounts of capital investment by the heavily indebted company.