(Yicai Global) Aug. 20 -- China Unicom Hong Kong is considering spinning off its Internet of Vehicles unit to file for an initial public offering on the Chinese mainland’s A-share market.

The potential spin-off is under revision of China Unicom Smart Connection Technology’s board and shareholders, the Hong Kong-listed firm said in a filing yesterday. In case of approval, China Unicom Hong Kong will remain the IoV division’s controlling shareholders, it added.

China United Network Communications, which holds 100 percent stake in China Unicom Hong Kong, is following the other two Chinese state-owned telecoms companies in efforts to raise funds after being removed from the New York Stock Exchange at the beginning of the year. China Telecom and China Mobile have revealed their secondary listing plans on the mainland’s market in March and May, respectively.

The prospective of an independent IPO can enhance Smart Connection Technology's financing capacity and operational flexibility, speed up its business development and ramp up its competitiveness, Wang Xiaochu, chairman of China Unicom Hong Kong, said at China Unicom Hong Kong's mid-year results conference yesterday, adding that the parent can also benefit from the unit’s value increase.

Of the four to five units China Unicom considers for separate listings, Smart Connection Technology is smaller in size than others such as Merchants Union Consumer Finance, a joint venture of China Unicom and China Merchants Bank, which is developing better.

"We hope to give Merchants Union Consumer Finance a little more time to grow before considering an IPO,” Wang said, noting that Smart Connection Technology will serve as pioneer. The firm is already in talks with related regulators about the separate listing, he added.

Formed in 2015, Smart Connection Technology finished a mixed-ownership reform in 2019, bringing in strategic investors including FAW Group, Dongfeng Motor and GAC Group. It provides intelligent connection and professional smart operation services, as well as intelligent transportation applications such as vehicle-road collaboration, fleet management and intelligent cockpit based on new generation information technologies including fifth-generation network.

Smart Connection Technology’s net profit fell 0.8 percent to CNY67.5 million (USD10.4 million) last year. Revenue rose 14.6 percent to CNY420 million (USD64.6 million).

China Unicom Hong Kong also reported its financial results for the first half yesterday. Net profit jumped 20.6 percent to CNY4 billion (USD615.3 million) in the six months ended June 30. Revenue also increased 9.2 percent to CNY16.4 billion (USD2.5 billion).

Editors: Zhang Yushuo, Futura Costaglione