Series of gaffes taints Unicom's US$11.7b announcement

[HONG KONG] For a deal that's been months in the making, the US$11.7 billion share sale plan announced by China's second-largest wireless carrier sure looked like a rushed job.

That's according to Francis Lun, Hong Kong-based chief executive officer of Geo Securities Ltd, after a series of gaffes by China Unicom (Hong Kong) Ltd and Shanghai-listed China United Network Communications Ltd undermined Wednesday's disclosure that the Chinese carrier would bring in more than a dozen investors as part of a government push to privatise its state-owned enterprises.

"There's been confusion right to the very last moment - they shouldn't be rushing ahead to make the announcements," Mr Lun said. "It shows their incompetency. The approval process has to be called into question when they deliver misleading messages like this."

It began with the announcement itself, which kicked off as a presentation to journalists, analysts and investors at about 4:30pm on Wednesday in Hong Kong but the material detailing of one of Unicom's biggest deals ever wasn't available online until about half an hour later.

The briefing material listed CRRC Corp as one of its new investors but the Chinese train maker said the following morning that it didn't participate in the deal.

Unicom, voted as having the "Best Investor Relations in China" by FinanceAsia magazine, also said on Wednesday its shares would resume trading in Hong Kong the following day, only to change its mind hours later by saying the trading halt would continue until further notice.

Then there was China United, which released a statement on the sale to the Shanghai exchange, only to withdraw it hours later. The company, which has been halted from trading in Shanghai since April, then issued a statement on Thursday saying the stock will continue to be suspended for "technical reasons" for another three days, pending the release of the share-sale announcement. A Unicom Group representative said the retraction was due to technical reasons. On CRRC, an affiliate of the company will be making the investment, the representative said.

While investors are more interested in whether Unicom's new investors spur positive changes to the company, even that is under question, according to Geo's Mr Lun.

"It's one thing to have new investors, it's another thing if new investors can bring material change," Mr Lun said. "That's what we're waiting to see. If the existing management still controls everything and nothing has happened then there will be disappointment."

BLOOMBERG