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China Mobile considers mainland listings for subsidiaries

Management hails Beijing's call to bring tech companies back home

The group believes its businesses are being undervalued.   © Reuters

HONG KONG -- China Mobile, the world's largest telecom carrier by number of subscribers, is considering spinning off subsidiaries from its U.S. and Hong Kong-listed arms and floating them on mainland exchanges, group management said on Thursday.

Under Beijing's pledge to bring overseas-listed Chinese tech giants back home, the state-owned telecom carrier hopes home listings of businesses in the field of internet and terminal services would boost group valuation.

"Many of our terminal services companies operate just like Xiaomi, but they are undervalued because of the declining attention [towards] telecom operators in the global financial markets in recent years," Li Yue, group chief executive officer, said during a press conference in Hong Kong on Thursday. He said its internet-based businesses were also undervalued due to the nature of the group.

Chinese smartphone maker Xiaomi last month filed an application to the Hong Kong Stock Exchange for what is expected to be the largest IPO since the debut of Chinese e-commerce giant Alibaba, which could value the company at $100 billion, according to media reports.

"We want to spin off these undervalued businesses and make separate listings [in China]," he said, adding that the move would both serve the company's best interests and align with the direction of Beijing's reform.

While Li said no concrete plan has been made at this stage, he expected significant progress in the next one-to-two years.

China Mobile Ltd, the flagship unit under China Mobile Communications Corp, is listed in Hong Kong with a market capitalization of $1.51 trillion Hong Kong dollars ($192 billion), as well as on the New York Stock Exchange. It had about 900 million mobile customers as of March and controlled 60% of the domestic market.

However, the company does not seem to be in a hurry to make a secondary listing through the China Depositary Receipt (CDR) structure proposed in March. Modeled after ADRs in the U.S., the financial instrument allows shares of foreign-listed Chinese companies to be sold in yuan on domestic exchanges. Qualified companies should be in high-tech fields such as web services, artificial intelligence and biomedicine, with market capitalization of over 200 billion yuan ($31.4 billion), according to Chinese regulators.

"Our size is very big ... and we have ample operating capital," said chairman Shang Bing at the press conference, adding that the company will study the possibility after detailed regulations are drafted.

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