China Unicom to Spin Off Technology Unit in Listing Rush

(Bloomberg) — China Unicom Hong Kong Ltd. is considering an initial public offering for its smart internet technology division in mainland China, following other state-owned mobile carriers raising funds at home after being expelled from the New York Stock Exchange.

The potential spinoff of China Unicom Smart Connection Technology Ltd. is subject to approval by the board and shareholders, the company said Thursday in a statement. The timing and size of the offering will be determined later.

China’s three dominant wireless carriers are seeking funding for the expensive construction of their 5G networks after they were booted from the U.S. bourse under an executive order by former President Donald Trump. The home market looks increasingly attractive as China cracks down on listings abroad amid rising tensions with the U.S. across issues from data security to trade and the origins of the coronavirus.

China Mobile Ltd., the world’s largest wireless carrier based on number of subscribers, is planning a 56 billion yuan ($8.6 billion) secondary listing in Shanghai, while China Telecom Corp. will start trading in the city Friday in what’s expected to be the world’s largest public offering of 2021 so far. All three companies are also traded in Hong Kong.

China Unicom’s plan to split off its 69%-owned Smart Connection Technology subsidiary via a share sale in mainland China may extract the value of its investment in internet of vehicles and lift sentiment after its removal from U.S. trading. The move could bring in strategic partners to speed up expansion of a separate entity and broaden applications for the company’s 5G network.

Smart Connection focuses on high-speed digital applications like cloud services and big data analysis. Its other strategic investors include FAW Equity Investment (Tianjin) Co. and Dongfeng Asset Management Co., according to the statement. It posted net income of 67 million yuan last year on operating revenue of 420 million yuan.

The parent company reported a 21% jump in profit Thursday to 9.2 billion yuan for the six months through June. It declared an interim dividend of 0.12 yuan per share. It didn’t recommend any interim dividend last year.

Contact editor Bob Simison (bobsimison@caixin.com)

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