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China Netcom cuts debt by 17% to boost IPO
(Agencies)
Updated: 2004-09-15 17:01
China Netcom Group Corp. (Hong Kong) Ltd., controlled by the nation's
second-largest fixed-line operator, cut its debt by 17 percent in the first
half, improving its chances of raising $1.5 billion selling shares.
Netcom, which provides fixed-line and Internet services in six cities
and provinces in northern China, cut its debt by 11.9 billion yuan ($1.4
billion) in December to 58 billion yuan as of June 30, as it transferred debt to
its parent.
The reduction may alleviate concerns that the company holds excessive debt as
it prepares for an initial public offer as soon as October. Netcom's plans to
spend 70.7 billion yuan in the three years to 2006 on new networks and rising
competition from cellular phone operators may deter investors.
"The
clean-up of the balance sheet will help allay our fears about high debt," said
Louis Wong, who helps manage $25 million he manages at Phillip Asset Management
in Hong Kong. "There are still question marks about how competition develops in
the industry and the future capital needs for Netcom to develop a high-speed
wireless service."
Higher network costs reduced its earnings in 2003. Depreciation and
amortization expenses rose 9 percent to 20.5 billion yuan for the year ended
December, causing a 2.2 percent decline in operating profit before asset
write-offs.
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