China looks almost certain to have to put off the massive flotation, in the US, of its biggest telecoms company because of the continuing stock market gloom.

China Telecom, for years the state-owned monopoly and still the biggest player, was due to release shares worth as much as $4bn (�2.6bn) to the New York market on 6 November.

But, according to the Reuters news agency, a lack of interest from investors means the flotation has been delayed at least for a few more days and perhaps for much longer.

The flotation has already kicked up a storm in the "special administrative region" of Hong Kong, after plans were unveiled to boost the cost of calling the mainland by 750%, from 2 US cents a minute to 17 cents.

The proposal, which critics said could cost businesses, more than $5,000 more a month, drew howls of anger from Hong Kong.

Regulatory risk

According to Reuters, sources close to the deal said it would be relaunched "no later than early next week".

The problem, though, is that with 80% of the company still in the hands of the state - and the telecoms sector no longer a magnet for investors - some institutions are reluctant to climb aboard.

China has a history of rapid changes in regulation of the phone business. It is only a few months since the snap decision was made to create two new companies to compete with CT and its main rival, Unicom.

That "regulatory risk" may be too much for investors to stomach unless the offer is improved.

But the price per share cannot come down much further than the HK$1.48 low end of its range without undercutting the book value set by the government at HK$1.46, a move currently banned by Beijing.

The deal is only the latest in a string of flotations - mostly in Hong Kong, where the "red chips" make up a significant proportion of the market - to raise money to modernise its economy.

The demand in Hong Kong for mainland shares is unabated, however. Sources told Reuters that the 5% of the overall issue earmarked for the territory was sold out - meaning buyers will now have to be refunded.