By Cathy Chan

HONG KONG China Netcom Group (Hong Kong), controlled by the second-largest fixed-line phone operator in China, has filed with U.S. regulators to raise as much as $1.5 billion in an initial public offering to fund expansion.

The state-owned Netcom plans to sell 1.05 billion shares in a global offering, with shares to start trading in New York on Nov. 16 and in Hong Kong a day later, the company said in a filing Friday to the U.S. Securities and Exchange Commission.

The shares will account for 16.2 percent of the company's total outstanding after the offer is completed, the document said.

Netcom, which provides phone and Internet services in six cities and provinces in northern China, is betting that growth in the high-speed Internet market and cash flow from its traditional phone business will attract investors.

Netcom will offer 470.7 million shares in the United States as American depositary receipts and through a private placement in Canada, according to the filing. Hong Kong individual investors are entitled to 104.6 million shares and can place their orders from Nov. 4 onwards. China Netcom will price the shares on Nov. 9 in New York, the document said.

Netcom needs more users to lift profit, as growth in new lines has lagged that at cellular competitors such as China Mobile (Hong Kong) in the nation's $50 billion phone market. China's fixed-line users rose 24 percent to 299 million in July from the year-ago period, compared with a 30 percent increase in cellphone users, according to government statistics.

The company's revenue rose 12 percent to 32.5 billion yuan, or $3.9 billion, for the six months that ended June, reflecting some of the 10.4 billion yuan of connection fees collected before 2001, according to a sale document last month.

The company plans to pay between 35 percent and 40 percent of its profit as dividends to draw investors.