China Network Communications Group Corp (China Netcom) has filed its listing application documents for a US$1.5 billion initial public offering (IPO) in Hong Kong and New York, a reliable source said Tuesday.

The company, the nation's second-largest fixed-line phone operator, filed the application with the US Securities and Exchange Commission (SEC) and the Hong Kong Stock Exchange last week, said the source.

China Netcom is likely to start selling its shares in mid-September at the earliest, as it usually takes two months to win regulatory approval, analysts believe.

"Our developing strategies are proceeding as planned, but as far as the IPO is concerned, we have nothing to declare right at the moment as we should abide by related rules and regulations in the capital market," said Zhang Ying, general manager of China Netcom's Planning and Strategy Department.

However, he did not deny that the documents were filed last week.

According to the source, China Netcom plans to list its networks in six northern provinces and cities including Beijing, Tianjin, Shandong, Hebei, Henan and Liaoning, and its operations in Shanghai and Guangdong.

It will also include its nationwide broadband business and the overseas network it bought last year from Asia Global Crossing.

China Netcom is planing to float 25 percent of its enlarged share capital. Some private investors in its predecessor firm, including Goldman Sachs and Rupert Murdoch's News Corp, will see their holdings converted into shares in the listed firm, said the source.

Citigroup, Goldman Sachs and China International Capital Corp are underwriting the deal.

China Netcom has also won Chinese regulatory approval to list as a "red-chip," giving it greater financing flexibility.

Zeng Jianqiu, a professor with Beijing University of Post and Telecommunications, believed that listing will be an inevitable and effective means for China Netcom to seek further expansion.

"The timing is feasible for China Netcom to get listed given the sound national economy and recovery of the world telecom market," he said.

He stressed that the most urgent matter for China Netcom is to conduct a thorough study of the market and work out proper strategies before, during and after the listing.

"These are of paramount importance for China Netcom to maintain its competitiveness and remain attractive to investors," he said.

Dai Chunrong, an analyst with China Securities, agreed that is vital for the firm to work out an attractive listing plan and market its selling points to potential investors.

"That will enhance investors' recognition and build up their confidence for its business performance," she added.

Zeng also pointed out that China Netcom has a number of selling points, such as its "Little Smart" wireless phone services and broadband service.

China Netcom's listing also provides a new investment opportunity for investors in China's telecom industry, he said.

As the second largest fixed-line telecom operator in the Chinese market, China Netcom is now the only one among the four major telecom operators not to be listed.

The company has total assets of 240 billion yuan (US$28.9 billion) with a 58 percent debt-asset ratio.

(China Daily July 28, 2004)