China Unicom, the country's number two mobile operator, opened a massive domestic share sale on Tuesday which it hopes will raise 11.26bn yuan ($1.4bn; �890m).

The flotation puts five billion shares into the hands of mainland investors keen for a slice of the booming mobile market.

Unicom, which uses US company QualComm's CDMA technology rather than the much more globally popular GSM standard, is the first mobile operator to list on the domestic market.

Strategic investors and big institutions are to share 45% of the offer, the biggest proportion ever in a Chinese IPO.

In exchange for agreements to hold shares for 12-18 months in the case of strategic shareholders and 6 months for institutions, the big guns have the offer to themselves until Friday, when the retail segment begins.

Boom time

In a population of 1.3 billion, 175 million Chinese already own mobile phones, mostly urban dwellers, making China a wide-open market while Western countries are approaching saturation.

Raising the money to make sure its networks cover the rest of the vast country is one reason for the flotation.

The risk of greater competition is another.

For many years China's telecoms business was dominated by China Telecom, the Ministry of Posts and Telecoms' favourite subsidiary.

Unicom was an offshoot of the ministry responsible for the electrical and electronic industries, and not till the two agencies were combined in the mid-1990s did Unicom begin really to grow.

Now it faces a stiffer challenge: its duopoly with China Mobile (also listed in Hong Kong) is up for revision.

Both China Telecom and the new regional company split off from it, Netcom, are now allowed into the mobile market as well as the fixed-line business.

Two markets

The sale is not the first time that Unicom has sold itself off in a public offering.

China Unicom Ltd, the company's Hong Kong subsidiary, is one of a number of mainland "red chips" which listed there in the late 1990s, after the island was handed back to China by the British in 1997.

At HK$5.05 (US$0.65; �0.42) its shares are worth 15 times the company's historic profits - in fact slightly cheaper than the mainland offer, shose price-to-earnings ratio more than 20.

But analysts believe that will make little difference to the offer's popularity, especially since the two sets of shares are not exchangeable.