China Mobile Communications Group Co., Ltd (China Mobile) will buy back up to $12.6 billion worth of its Hong Kong-listed shares on the market, as the company prepares for its 48.7 billion yuan ($7.7 billion) listing in Shanghai on Wednesday, China’s biggest public share offering in a decade.
The Chinese state-owned company told the Hong Kong Stock Exchange it would press ahead with a plan to buy back up to 2.05 billion shares using existing cash and working capital.
The Beijing-based firm did not disclose any reason for the buyback, but listed companies usually carry out such plans to buoy their stock price by removing some of their equity from the market.
The state-owned company raised 48.7 billion yuan by selling 845.7 million shares in Shanghai, almost half of which were issued to 19 strategic investors. If the so-called greenshoe option is used, it would bank 56 billion yuan surpassing the 54 billion yuan that smaller rival China Telecom raised last August.
Morgan Stanley said the buyback plan hedges the dilution effect of the mainland listing, placing a target price of HK$65 apiece for the Hong Kong shares.
China Mobile’s state-owned rivals, China Telecom and China Unicom are already listed in mainland China. The three were delisted from the New York Stock Exchange after a Trump-era decision to restrict investment in Chinese technology firms, amid continuing tensions between Washington and Beijing.
In August, China Mobile announced that it would use its new funds to shore up its 5G capabilities, as well as cloud infrastructure and smart home projects. It then disclosed plans to use roughly half the money it planned to raise in Shanghai on wireless technology, and build at least 500,000 5G base stations by 2022.