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Shuangliu Airport Co Ltd in Sichuan Province is expected to be listed at home or overseas soon in a bid to collect funds for further expansion.
Pan Xiaojun, general manager of Sichuan Province Airport Group Co Ltd (SAG) - the majority shareholder with a 51 per cent stake - announced yesterday.
Investors from Hong Kong, Shenzhen, Dalian and private enterprises own the remainder.
"We plan to list it within three years, but we believe we can shift it to an earlier date," Pan said.
He revealed the plan at the annual summit on Chinese airports in Shanghai, which closes today. He said the shareholding company will be listed on a stock market in North America, Europe, Hong Kong or on the Chinese mainland.
"The finalized choice will be made according to which will be favorable to the company," he said.
SAG, which was set up on November 1, 2004, has a registered capital of 1 billion yuan (US$121 million). Its total assets are valued at 1.43 billion yuan (US$173 million).
Pan said SAG aims to build the second runway and second terminal building at Shuangliu Airport with funds raised from flotation.
But he did not reveal how much he believed could be gained when the company is listed.
The airport is situated near Chengdu, capital of Sichuan Province. It handled 11.68 million passengers last year, reaching saturation.
Under the programme for 2035, it is expected to receive 68 million passengers annually. Its expansion project needs an investment of an anticipated 20 billion yuan (US$2.42 billion), Pan said.
"The funds can be partially collected from the stock market, but the sum will be a small amount compared to the huge investment needed," he said.
The solution is to seek strategic partners as financial backers.
"Co-operation with foreign investors with strong financial strength has been on the company's agenda," the general manager said.
He told China Daily in yesterday's interview that SAG is negotiating with four companies from Britain, Germany and Singapore, as well as a domestic firm, about a strategic alliance.
But he declined to give details of who stands the best chance of becoming SAG's partner and when the result will be announced.
Insiders from the General Administration of Civil Aviation of China (CAAC) said the expansion of Shuangliu Airport is a response to the large-scale development of China's western region.
Shuangliu Airport and airports in Kunming, Xi'an, Urumqi and Shenyang will be developed into regional aviation hubs, said Zhang Guanghui, director general of the Department of Airports of the CAAC.
Sichuan now governs 10 small civil airports, some of which are posting losses because few people can afford to fly.
But Wang Guoping, an analyst with China Galaxy Securities, said he is doubtful about the prospects of the new plan.
"It lacks feasibility as all four operators are now listed companies," he said.
"But it's still possible if the reshuffle is implemented under a government-led scheme."
The analyst said it is reasonable for China Unicom to give up one network and focus on another to boost its profitability.
"Personally, I would suggest Unicom gradually phase out of the GSM network business and focus on the CDMA network," he said.
Impact on 3G licensing
If the new plan is implemented, the consolidation will see the number of 3G licences reduced to three.
The industry had been expecting the government to hand out four licenses, but regulators are increasingly concerned with the costly network build-out.
Wang said the number of 3G licenses is not necessarily associated with cost of the network build-out.
"The government will definitely have its hands on the 3G investment and curb it if the economy gets too heated," Wang said.
After buying Unicom's CDMA network, China Telecom is expected to upgrade the cellular network to the 3G CDMA 2000 standard.
But it remains unclear what standard China Mobile and China Unicom will adopt.
"The government may do some co-ordination work, trying to persuade one to adopt the TD-SCDMA, and another to use WCDMA," a source said.
That would be a big win for TD-SCDMA if the standard is adopted by a major operator.
Unlike WCDMA and CDMA 2000, TD-SCDMA has yet to reach maturity and be put into commercial use.
Chinese Government officials have asked TD-SCDMA developers to get all products ready for commercial use before the middle of this year.
Some European companies have been lobbying Chinese operators to bundle WCDMA and TD-SCDMA, which complement each other technically.
But in that case, TD-SCDMA is believed to hold a smaller share in the network deployment.
(China Daily April 6, 2005)
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