China Mobile moves abroad
CHINA Mobile will buy a majority stake in a Pakistani carrier for US$284 million in an arrangement that’s expected to be sealed next month, the companies said yesterday.
The venture will be the world’s biggest mobile phone carrier’s first international deal and is seen as a symbolic start for its global expansion strategy, industry insiders said.
Beijing-based China Mobile will pay cash for an 88.86 percent stake in Paktel Ltd, a unit of Luxembourg-based Millicom International Cellular SA, which operates networks in developing countries.
Paktel, ranking fifth in Pakistan with 1.5 million users, is valued at US$460 million, according to a statement from Millicom.
China Mobile confirmed the deal yesterday but declined further comment.
The arrangement still needs regulatory approval.
“Chinese telecommunications carriers are making strategic moves to focus on international markets as the domestic market is now growing slowly after several years of rapid expansion,” said Yi Mingyu, an analyst at Beijing-based CCID consulting, a research firm under the Ministry of Information Industry.
Among all Chinese carriers, China Mobile’s growth is still considerable, Yi said.
Hong Kong-listed China Mobile earned 96.8 billion yuan (US$12.1 billion) last year, up 23 percent from 2005. The company’s total user base hit 318 million, a 20 percent increase from the previous year, the company said in a statement last week.
China Mobile’s development strategy is to invest overseas, especially to explore emerging markets, company Chairman Wang Jianzhou said in September.
China Mobile wants to export to emerging countries the marketing tactics and technology it developed in the rural areas of China, the world’s largest market by users.
The company also can’t afford the high cost of expansion in Western countries, where mobile penetration rate is already around 100 percent, Yi said.
China Mobile failed last July to acquire Millicom, which operates networks in 16 emerging markets including Latin America and Africa.
“The sale of Paktel allows Millicom to focus on the 16 markets where we have already established strong market positions,” Marc Beuls, Millicom president and chief executive, said in a statement.