China Mobile Shares Rise In First Day of Trade in Shanghai

(Bloomberg) -- China Mobile Ltd., the country's largest wireless carrier by sales that was removed from the U.S. market last year, surged in its first day of trade in Shanghai.

The state-run company, one of the targets of an investment-ban order by former U.S. President Donald Trump, rose as much as 10% before paring the advance to close 0.5% higher. The shares were sold at 57.58 yuan each in an offering that is expected to raise 56 billion yuan ($8.8 billion) after the company exercises an over-allotment option.

Considering the final amount, the listing is the largest in China in more than a decade. The telecom giant is debuting in its home-country after the New York Stock Exchange suspended trading in the stock about one year ago, along with other two major Chinese state-owned operators, China Telecom Corp. and China Unicom Hong Kong Ltd.

China Mobile stock in Hong Kong ended 3.3% higher, trimming an advance of as much as 7.3% after the company said it plans to exercise its powers under a buyback mandate to repurchase up to 2.05 billion shares in the Asian financial hub after Feb. 7.

The firm is the latest to join Chinese peers banned in New York in offering shares back home. China Telecom has retreated about 5% since it listed in Shanghai in August after raising more than $7 billion. China United Network Communications Ltd., which was already trading in Shanghai, is down around 7% over the past year.

The world's largest carrier by subscribers, China Mobile has been facing a bulging budget in the country's push to lead the world in 5G and future generations of telecommunication technologies. Last year alone, the company pledged 110 billion yuan for 5G network construction.

The superfast networks may take years to pay back as consumers are slow to adopt the new technology due to a lack of attractive applications. The Shanghai listing will help China Mobile raise fund for expanding 5G infrastructure and developing uses to make it more profitable.

Proceeds from the listing will be used to fund projects that will cost the company 157 billion yuan in total, China Mobile said in its prospectus. The company has also estimated that profit for 2021 could grow up to 8% from a year earlier to 116 billion yuan.

China International Capital Corp. and Citic Securities Co. are sponsors of the offer. While the listing attracted 19 strategic investors, mostly state-owned entities, underwriters will need to pay a combined 756 million yuan to take up 13.1 million shares as some individuals and funds failed to make payments after subscription.

The strategic investors in China Mobile will pay 24.3 billion yuan for 49.9% of its planned A-share offer ahead of exercising the green shoe option, and the buyers will be subject to a lock-up period of 12 months to 36 months.