China Tower Corp., set up to own the wireless infrastructure of the nation’s major carriers, plans to raise as much as 60 billion yuan ($9.7 billion) selling a stake to outside investors, people with knowledge of the matter said.
The state-owned venture aims to sell as much as a 20 percent stake in a private placement, ahead of a planned initial public offering in 2017, the people said. A formal sale process may start as soon as the fourth quarter, three of the people said, asking not to be identified as the information is confidential.
Market leader China Mobile Ltd. and its two smaller rivals announced plans last year to pool their wireless tower assets and reduce investment duplication as the country rolls out faster networks. Chinese carriers have come under pressure as customers increasingly switch to using mobile messaging tools such as Tencent Holdings Ltd.’s WeChat service.
China Mobile, China Telecom Corp. and China Unicom Hong Kong Ltd. aim to inject a combined 300 billion yuan of assets into the venture by the end of August, according to the people. Investment banks have started reaching out to China Tower on the stake sale plan, though no advisers have been hired yet, two of the people said.
Shares of China Mobile rose 0.7 percent to HK$98.20 at the close in Hong Kong. China Telecom climbed 1.4 percent to close at the highest level in more than two weeks, while China Unicom dropped 1.6 percent.
The administration of President Xi Jinping is seeking to overhaul China’s bloated $3 trillion state sector as growth slows in the world’s second-largest economy. It has pushed government-owned firms, including cement producer China National Building Materials Group Corp. and bad-loan manager China Huarong Asset Management Co., to boost competitiveness by introducing private capital.
Plans by China Tower are at an early stage and details are subject to change, the people said. Given the sensitive nature of the industry, China Tower may only invite domestic investors to join the private placement, one person said.
China Mobile, the operator with the broadest network coverage, has a 40 percent stake in the tower venture, according to its annual report. No. 2 wireless operator China Unicom owns 30.1 percent, while China Telecom holds the remainder.
A representative for China Tower didn’t respond to e-mails seeking comment, while an investor-relations official at China Unicom declined to comment. China Telecom said in an e-mailed statement it is working on the possible sale of assets to China Tower and hasn’t reached an agreement yet. A representative for China Mobile declined to comment beyond a July 2014 exchange filing on the creation of the tower venture.
— With assistance by Vinicy Chan, and Steven Yang