Shanghai-listed China Unicom plummeted by the 10-percent daily cap yesterday as it was expected to issue additional shares to raise money for the coming revamp of the telecommunications industry.
China Unicom's Shanghai-listed shares dropped 9.98 percent to 10.92 yuan (US$1.53) while the Shanghai Composite Index decreased 4.07 percent yesterday.
China Unicom plans to issue shares or bonds of 120 billion yuan and it will probably acquire China Netcom's assets in the industry reorganization, media reported, citing unidentified sources.
Shares like Ping An Insurance (Group) Company of China and Shanghai Pudong Development Bank shrank after they announced large money-raising plans.
The telecommunications reorganization will take place after the two-week National People's Congress starting on March 5, the Shanghai Securities News said, citing an official at the economic planning agency.
The plan is to form three business groups through the breakup of China Unicom.
China Unicom's smaller code division multiple access, or CDMA, network will be sold to fixed-line operator China Telecom while its larger global system for mobile communications, or GSM, business will be merged with China Netcom, the country's No. 2 fixed-line phone carrier behind China Telecom. China Mobile will take over China Tietong Telecommunications and the three merged companies will then offer both fixed-line and mobile services, industry insiders said.
"Even after the merges, China Mobile will still dominate the market for a period and it will take time for others to catch up with it," said Sandy Shen, an analyst at US-based Gartner Inc.