If data has replaced oil as the world’s most valuable resource then China Tower should make a mint. The state-owned mobile infraastructure group plans to flog shares worth one quarter of its equity for as much as $8.7bn, making it Hong Kong’s largest IPO in eight years. Its valuation may look cheap compared with global peers. Those drilling into the stock hoping for any growth surprises will be disappointed.
China Tower’s main business is to provide telecommunications towers to the country’s three state-owned telecom providers: China Mobile, China Unicom and China Telecom. It has around 97 per cent of China’s total tower sites.
Such market domination should be a good thing. But China Tower is largely controlled by its clients. It makes its money from the spread of tenant rates over costs. When the pricing formula was renegotiated in February, that mark-up was reduced. The state, which controls all four groups, wants to keep consumer prices reasonable.