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Monday, September 22, 2003

China Mobile's Agile Movements

While the a strong whiff of 'promo' about this Finance Asia article, the details you can find there are real enough. China Mobile is now the world's No2 carrier in terms of subscribers, and set to rocket upwards if the market potential is anything to go by. This situation could also be revealing about the pattern which may be to come as China's internal market expands.

The company's position as the second largest mobile phone operator in the world by number of subscribers was bolstered at the end of last year with the acquisition of seven mobile phone interests in China. The acquisitions were funded by a $6.6 billion share placement and a $690 million convertible bond, the largest equity issue from non-Japan Asia ever achieved. With the assistance of its financial advisers, China Mobile Hong Kong's senior management showed a stroke of genius by registering the deal in the US which meant that a lot of institutions were encouraged to participate. The convertible bond portion of the transaction was 25 times subscribed.

"China is now absolutely in the super league, one of only a handful of truly global wireless companies," commented the head of equity capital markets for Goldman Sacks, Mike Ryan, following the successful deal.

From the proceeds, China Mobile (HK) was able to acquire seven mobile communications interests from China Mobile Communications Corporation in Beijing, Shanghai, Tianjin, Liaoning, Shandong, Hebei and Guangxi. "The acquisitions have significantly expanded the subscriber base and geographical coverage of our business," says Mr Wang. "The group's network in the coastal provinces of China now covers almost half of the population in China." As a result, China Mobile (HK) services approximately 53% of all mobile subscribers in China, with subscriber numbers exceeding 45 million by the end of 2000...............

"To build our wireless data business, we have established a joint venture with Hewlett Packard and other parties." The joint venture will focus on the development of wireless data-enabling technologies and applications. This will include a standardized nationwide platform for wireless data.

China Mobile (HK) formed another strategic alliance in February when it signed a deal with Vodafone to share management expertise and human resources as well as operational expertise. It will also participate in joint research and development in key technologies, infrastructure, applications and solutions relating to the mobile phone market. Vodafone's chief executive, Chris Gent, now sits on the board of China Mobile (HK) as a non-executive director, in part to assist the company in seeking new joint ventures and equity-based strategic alliances.
Source: Finance Asia

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