A senior manager of China Telecom, who preferred to be unnamed, said: "For China Telecom, the listing is more strategically oriented rather than financially driven as is usually expected."

Neither China Telecom nor its underwriters Morgan Stanley Dean Witter, Merrill Lynch and the China International Capital Corporation, have revealed specific details.

Sources told China Daily that the initial public offering would include China Telecom's branches in Guangdong, Jiangsu, Shanghai and Zhejiang.

It is estimated that the China Telecom's IPO will attract between US$2.5 billion and US$3 billion.

Many people have expressed concern that China Telecom has chosen a very bad time to go public, but the company's managers do not seem troubled since they believe capital demand is not the priority target.

After years of capital accumulation, China Telecom has constructed a fixed-line telecom network using the most up-to-date equipment.

The firm does not urgently need funding for any large-scale projects at the moment, unlike China Unicom, which needs a lot of capital to upgrade its CDMA (code-division multiple-access) network.

Even if China Telecom needs money, domestic financial institutions will be very happy to satisfy the firm's demand given its creditworthiness and their eagerness to invest in a high-growth industry.

Jonathan Zhu, managing director and head of Morgan Stanley's telecom team, said: "China Telecom's listing is more strategy-driven rather than the pure pursuit of money."

He said China Mobile and China Unicom, the two overseas-listed telecom carriers, reported significant improvements in management and became more transparent after their listings on the New York and Hong Kong stock exchanges.

Industry insiders said that, besides upgrading its management level and becoming more global in its operations, another major purpose of China Telecom's listing is to protect itself with the umbrella of overseas investors against China's "inconsistent" telecom policies.

China does not yet have a telecom law to ensure the equal treatment of all telecom operators. Some operators have complained that the telecom regulations are not "consistent and equal."

A good example is the regulator's treatment of Little Smart, a wireless communications device.

As a major new revenue generator of the fixed-line carriers, Little Smart or PHS (personal handset system) has been widely developed in China.

But, as this cheap wireless device tried to head for big cities such as Beijing and Tianjin, the telecom regulator ordered the carriers to stop.

It is widely believed that the regulator worried that Little Smart would threaten the interests of the two listed mobile carriers.

A clear, consistent and equal regulatory system is the foundation of the telecom industry's healthy development, according to telecom carriers from both China and abroad.

(China Daily August 8, 2002)