China Mobile split listing? Communication transformation still needs to be explored

Source: visual China

Source: visual China

Will China Mobile be split up?

At a mid-term performance conference held by China Mobile in June, Li Yue, executive director and CEO of China Mobile, disclosed that three to four of its companies are currently being planned to be listed separately, but the exact time and place of listing has not been determined, and China Mobile Hong Kong has no plans to do so.

From the specific business point of view, Li Yue said that he would consider the choice of companies that have been operating independently, less connected with the network business, and facilitate financial accounting. The news was denied at the later stage.

However, according to media reports, when the reporter called the person in charge of China Mobile, the other side said that it was not on the scene of the performance release in Hong Kong and did not know the details. But there were sources who said it was reliable. Li Yue of China Mobile did say the above remarks.

Despite this, the spin-off of operators is a news that has appeared long ago. As early as 2015, there was news that China Mobile’s company was listed on the future or listed independently. At the time, mobile executive Liu Wei also said that For the future development of Mi Wei, China Mobile will give Mi Mi a more flexible mechanism and flexibility to allow external capital to be injected and independent IPO, but there is no clear timetable.

According to public information, China Mobile has a large number of subsidiaries, except for the operating subsidiaries of 31 provinces (autonomous regions and municipalities). Specifically, China Mobile Communications Group Design Institute Co., Ltd., China Mobile Investment Holding Co., Ltd., China Mobile Internet of Things Co., Ltd., China Mobile Online Service Co., Ltd., China Mobile (Suzhou) Software Technology Co., Ltd., China Mobile (Hangzhou) Information Technology Co., Ltd., Miwei Culture Technology Co., Ltd., China Mobile Internet Co., Ltd., China Mobile Tietong Co., Ltd., China Mobile Communications Group Terminal Co., Ltd., China Mobile Communications Group Finance Co., Ltd.

Among them, there are few businesses associated with the large network business, such as migoo company, mobile terminal, China mobile internet of things, China mobile investment, etc. These enterprises may become assets for capital operation in the future. From this point of view, the split listing of operators' subsidiaries is an early plan.

Is it a general trend to spin off the stock market?

First of all, from the perspective of policy, the further securitization and mixed reform of state-owned assets is the general trend.

At a recent press conference, the Beijing SASAC said it would further accelerate the adjustment of state-owned capital in the future and improve the efficiency of state-owned capital allocation. Another focus of this year's work is to raise the level of state-owned capital securitization, actively promote the reform of hierarchical classification and mixing, steadily and orderly expand the scope of employee stock ownership pilot projects, and promote the overall listing of first-class enterprises with mature conditions.

As far as SASAC is concerned, it is a major direction to improve the degree of asset securitization. According to reports from china securities journal, the current asset securitization rate of central enterprises is only 38 %, while that of most local state-owned enterprises is about 50 %, and there is still room for improvement.

Secondly, in terms of industry comparison, the asset securitization ratio of telecom operators can be further increased.

For example, China Electronics has 20 wholly-owned and holding secondary enterprises, 14 holding listed companies, many other industries under the banner of more listed companies, such as Aviation Industry, and many central enterprises have launched non-related business diversification.

However, China Unicom's listed companies are only China Unicom, and China Telecom has only 100 A shares and 100 Hong Kong shares. The reason for this is very complicated. The author believes that since the telecom operators have been listed after the restructuring, their main business has been developing rapidly and their cash flow is relatively good, so there is no incentive to split up the enterprises for listing. China Telecom's No. 100 Holding Company is listed because of the huge assets of China Telecom's third industry. However, the capital market has always had the goal of introducing capital to state-owned enterprises, so many other central enterprises in other industries have a larger listing platform.

Third, historically, the regulatory authorities have also tightened the control of non-main business of telecom operators. The three major operators have not been engaged in real estate business, but have paid more attention to the main business.

The author believes that this is related to the fact that the telecommunication business is one of the industries with relatively rapid development in the country. The telecommunication industry is an infrastructure industry, and the new generation of information technology belongs to a strategic emerging industry, and China's telecommunication equipment industry is also one of the industries with considerable competitiveness in the world, and the whole industrial chain is of great significance.

However, significant changes have taken place in the business structure of telecom operators. Current telecom operations need more upstream and downstream exploration of the industrial chain, to create an ecosphere, the three major operators are also actively exploring in this area, and operators in the past as long as focus on the main business can get a good profit performance. Because telecom operators are network business, business security is very important, so they also focus on the main business.

In the future, telecom operators must go out of the garden of telecommunications services and conduct more exploration.

Liu Aili, general manager of China Telecom, made it clear at the World Mobile Congress in 2018, Shanghai (MWCS 2018), that this competition is "a bowl of soup, soup, a bowl of soup, jingling in the reverse, jingling in the past, reversing the past, or that bowl of soup". Moreover, the value of this soup will drop once every time. China Mobile is actively exploring the strategy of "big links" and making digital enabling users.

This means that telecom operators will actively hatch many services through investment or holding services in the future. The establishment of financial companies and investment companies is an important node.

In the future, telecom operators will be able to engage in more business and incubate innovative business. Therefore, it is necessary to carry out more capital operations in some businesses in the body. The listing is more flexible and helpful for the physique, and it is also conducive to the reform of mixed ownership.

For the employees of these companies, the possibility of splitting up and listing may generate more incentive, and for investors, there is more room for mixed ownership. Moreover, from the practice of Internet companies, it is a mature strategy to hatch business from the inside and split up and list. From the base business to the migoo company, to the future spin-off and listing, all this is to give the business more imagination after centralization and re - integration.

Another important point, according to Li Yue, chief executive of China Mobile, is that telecom operators have been undervalued because of a decline in global investor attention, so they "want to set aside undervalued businesses to find a separate way to mix up listings".

At present, Tencent and Ali's valuation has already surpassed the three major telecom operators, even basically and telecom Unicom level. In the United States, Microsoft, Amazon, Google and others have a market capitalisation higher than U.S. operator leader ATT is not a class. Market capitalization is too small to meet the expectations of major shareholders, and some capital operations are difficult to carry out

Therefore, the spin-off of the business of telecom operators in the future is the general trend. The reform of the last phase of telecom operators was also brought to the market, and it has become a landmark project for brokers such as China Gold. In the future, will spin-offs bring glory to operators?

The author believes that from the performance of Mi Wei in the World Cup, there is already a certain imagination, but it is still ranked relatively in the mobile video market.

This market has strong competitors, and telecom operators do not have the flexibility of Internet companies in terms of management mechanism market mechanism. For example, in the performance of this World Cup, although the technology and user experience have made great progress, many Local company employees forced the development of many customers because of the business showdown, and caused a lot of complaints.

Therefore, splitting and listing can enhance the imagination, need the possible splitting and listing in the future to activate the driving force of these innovative plates, also need to further follow up the new trends of the industry, find their own suitable status plate, to further innovate the user operation methods, and actively promote the independent dissemination of users, this also needs and Internet Co learn more.

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