Vodafone to Pay $2.5 Billion for China Mobile Stake
--From AOL. Sounds like the best of the 3 to me...by far.--
Cooters
Hong Kong, Oct. 4 (Bloomberg) -- Vodafone Group Plc agreed to invest $2.5 billion in China Mobile (H.K.) Ltd., gaining a huge market for its services in return for helping China's biggest publicly traded mobile telephone company buy seven cellular networks.
Vodafone, the world's biggest mobile phone company, said in a statement to the London stock exchange that the initial agreement to buy a stake also envisages joint ventures. China Mobile said it will use the money to help fund the $32.8 billion acquisition of networks in Beijing, Shanghai and other cities.
Investing in China Mobile, which had 23.9 million customers as of Sept. 20, would give Vodafone access to a market forecast to be the world's second biggest by the year end and where less than 5 percent of the 1.2 billion population use mobile phones. Vodafone beat out rival bids by NTT DoCoMo Inc. of Japan and Deutsche Telekom AG of Germany for the stake.
``The Chinese market is growing much faster than anybody expected and for much longer than anybody expected,'' said Bertrand Bidaud, director of Asia Pacific telecommunications research at Gartner in Singapore. ``The challenge is to keep up with the growth. They need a lot of capital.''
Vodafone will pay for the China Mobile shares in cash and said it plans to sign a final agreement by Feb. 28, 2001.
Stake Size
Vodafone would gain a 2.6 percent stake given China Mobile's current $96 billion market value, before a new share sale to fund the acquisition of the networks.
``China Mobile and Vodafone will explore suitable opportunities for joint ventures and other equity-based strategic alliances,'' Vodafone said in a statement. It didn't elaborate.
Vodafone shares rose 0.4 percent to 252.5 pence. China Mobile rose 7.4 percent to HK$54.75.
In the first quarter of this year, China's cellular phone subscribers reached 51.7 million to surpass Japan's 51.1 million, researcher Dataquest Inc., a unit of the Gartner Group Inc. Gartner predicts that the market in China will grow to 89.9 million subscribers by the end of this year, making it second only to the U.S.
China Mobile has been in talks to buy the seven networks from its state-owned parent, China Mobile Communications Corp., since June.
Yuan Loan
The company will issue $22.67 billion in new shares to its parent and pay $10.17 billion in cash for the networks. It will help raise the cash with a $4.1 billion share sale to the public. It also plans a $600 million convertible loan, which may be increased by another $90 million.
China Mobile will also raise $1.5 billion in yuan- denominated loan from Chinese banks, the company said in a presentation to analysts on the transaction.
Goldman Sachs Group Inc., Merrill Lynch & Co. and China International Capital Corp., a joint venture investment bank between Morgan Stanley Dean Witter & Co. and China Construction Bank, are arranging the share and convertible bond sale, according to the cover of initial listing documents.
China Mobile needs to buy more networks in China to maintain its market share, which declined to 83 percent in the first six-month this year from 93 percent a year ago.
The company, which had 21.6 million subscribers in the first half this year, has ambitions that are ``nation-wide,'' said Charle Peza, head of telecommunications research at Lehman Brothers in Hong Kong.
China mobile is paying about $1,965 per subscriber for the seven networks, which are estimated to have 17.3 million subscribers at the end of 2000
Oct/04/2000 6:27 ET |
