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Apr-14-2008China Mobile Ends Policy of Pursuing Majority Stakes (Update1)(topic overview)
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China Mobile, which bought Paktel for about $460 million, faces competition from carriers including Singapore Telecommunications Ltd. and Hutchison Telecommunications International Ltd. for assets in emerging markets, where operators are adding subscribers at a faster rate than in developed economies because of lower mobile-phone penetration. Shares of Hong Kong-listed China Mobile Ltd. fell 3.4 percent to HK$126.40 as of 11:23 a.m. The stock has lost 8.1 percent this year, compared with a 14 percent decline in the benchmark Hang Seng index. Emerging-market telecom stocks trade at about 14.5 times estimated 2008 earnings, higher than the global average, with companies such as India's Tata Communications Ltd. at 54 times projected profit, according to Merrill Lynch & Co. estimates. China Mobile, whose 384 million customers exceed the U.S. population, saw its stock double last year after profit rose 32 percent to a record 87.1 billion yuan ($12.4 billion). [1] BEIJING (Reuters) - China Mobile, the world's largest mobile phone operator, said on Saturday that it was seeking small stakes in global telecom firms because controlling stakes had become too expensive. Although minor holdings would give China Mobile only limited sway over target companies, Chief Executive Wang Jianzhou said there would be wider benefits from such deals. "Entering into international telecom firms as small shareholders can help us learn from their experiences and gradually develop further," he told a seminar on the sideline of the Boao Forum for Asia in southern China. China Mobile Ltd. last year bought an 89 percent stake in money-losing operator Paktel Ltd. for $284 million, its first acquisition outside its home market.[2]
Wang said many telecom firms were looking at a small pool of targets in emerging markets, which was greatly driving up acquisition prices. "It's not realistic for us to try to always get controlling stakes at very high prices," he added, without revealing which markets he was interested in. Discussing delays in bringing Apple's iPhone to China, Wang said China Mobile was very interested in doing so because many of its customers were hungry for the phone.[2]
HAIKOU, China, April 12 (UPI) -- China Mobile isn't negotiating with Apple Inc. for sale rights to the U.S. company's iPhone because of concerns about business models and commercialization. China Mobile Chairman Wang Jianzhou said Saturday that such business concerns have prevented the two sides from initiating talks to sell the Apple phone system in China, China's state-run news agency Xinhua said.[3] The chief of China Mobile told the world that there are no negotiations. He says the business models of the two companies like are not compatible. That probably means that Apple's desire to share subscriber revenue from its phones is not in the cards if it wants to do business with the world's largest cellphone company. The comments are a reminder that the Apple iPhone's future in China is in trouble before Jobs sells his first handset through a carrier there.[4]
BOAO, Hainan, April 12 (Xinhua) -- China Mobile has not started formal negotiations with Apple Inc. over the iPhone, despite the intention of both sides to cooperate. Details about issues such as business models and commercialization have prevented the companies from entering formal talks.[5]
Separately, China Mobile hopes to offer Apple Inc.' s iPhone "as soon as possible,'' Wang said. The two companies aren't in negotiations over commercial terms, he said.[1] Wang said China Mobile subscribers currently totaled more than 380 million, nearly 30 percent of the country's total population. The number had been expanding six to seven million per month, mostly fueled by consumers in the rural areas, he added. He foresaw a robust future for the telecom industry, both at home and globally, as mobile communications were a "consumption of low energy" and a stimulus for other products such as mobile music. More than 200 million China Mobile users have used their phones to download music or songs, he said.[5] Wang told Xinhua the current number of China Mobile customers exceeds 380 million and continues to expand monthly thanks to customers in China's rural areas.[3]
Apple is not going to get a revenue-sharing in China which means that once it does enter the market and gets access to the China Mobile customers, iPhone revenue expectations for the PC and consumer electronics will be very modest.[4] In January, China Mobile spokeswoman Rainie Lei said the company had discontinued talks with Apple over the iPhone.[1] The mobile operator said in January that talks with Apple Inc on launching the U.S. company's popular iPhones in China had been called off, although Apple has never commented officially on the issue. "The door is always open and as long as our clients like it, we will actively push for it," he said.[2]
The cat-and-mouse game between China Mobile (NYSE: CHL) and Apple (NASDAQ: AAPL) over the release of the iPhone in China continues.[4]
"But now, we are changing the policy.'' The strategy shift widens the number of possible investments for China Mobile Ltd.' s state-owned parent, which made its first international acquisition last year through the purchase of Pakistan's Paktel Ltd. Investors seeking to profit from developing nations have pushed up the MSCI Emerging Markets Telecommunications Services Index 29 percent in the past 12 months, compared with a 5 percent drop globally.[1] April 14 (Bloomberg) -- China Mobile Communications Corp., owner of the world's most valuable phone company, dropped its policy of only pursuing investments that result in management control after competition for phone assets drove up share prices.[1] Wang added that the two sides had reached a consensus on some manner of cooperation but had yet to discuss a range of technical issues. He did not elaborate. He also said that China Mobile, which is listed only on the Hong Kong market, had not dropped its aim of floating a small batch of shares in Shanghai at some point despite the turbulent market conditions.[2]
No time frame was available either at the moment, China Mobile Chairman Wang Jianzhou said on the sidelines of 2008 conference of the Boao Forum for Asia on Saturday in China's southern Hainan Province.[5]
"For minority and majority stakes, we still focus on emerging markets'' in Asia, Africa and Middle East, Wang said at the Boao Forum For Asia conference in Hainan, southern China. "Many operators are chasing the same assets in emerging markets, so they are very expensive.''[1]
"Our door will remain open as long as there is customer demand," Wang said. Apple initially planned to get its iPhone into the lucrative Chinese market this year, having released it in the United States last year.[3] "Our door will remain open as long as there is customer demand," said the head the country's largest cell phone carrier during a panel discussion on the sustained growth and development of the telecom industry. Apple launched its iPhone -- a hand-held device that combines a mobile phone, a wide-screen iPod and an Internet device into one -- in the United States in January 2007. It planned to launch it into the Asian market this year.[5] Mobile carriers that offer the iPhone are required to share a percentage of sales with Apple, Vodafone Group Plc Chief Executive Officer Arun Sarin said in November. The iPhone, which was introduced in the U.S. and parts of Europe last year through carriers including AT&T; Inc. and Deutsche Telekom AG, will go on sale in Asia this year, Cupertino, California-based Apple has said.[1]
"Our biggest concern, is of course the business model,'' Wang said. "It's a very new business model.'' [1]
SOURCES
1. Bloomberg.com: Asia
2. Investing | Africa - Reuters.com
3. China Mobile balks at iPhone talks - UPI.com
4. 24/7 Wall St.: China Mobile (CHL) Backs Off Apple (AAPL) iPhone Again
5. China Mobile, Apple yet to open formal talks over iPhone launch_English_Xinhua
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