Analysts calm over Vodafone sale of stake in China Mobile
By Zhu Shenshen |
September 9, 2010, Thursday
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Print Edition
Print Edition
CHINA Mobile Ltd lost almost 4 percent yesterday after Vodafone sold its stake in the world's biggest mobile operator by subscribers for US$6.5 billion, nearly double what it paid, but analysts are not worried as they believed the Chinese telco's long-term development won't be greatly impacted by the share sale.
Based in Britain, the world's largest telecommunications operator by revenue sold about 642.9 million China Mobile shares for HK$79.20 (US$11.64) each in the Hong Kong stock market yesterday, representing a 3.4 percent discount to the stock's last close of HK$82 on Tuesday. That was the low end of the range that underwriters gave for the sale.
UBS, Goldman Sachs and Morgan Stanley were handling the placing.
The shares were sold to institutional investors in Asia, Europe and the Middle East, according to a Reuters report, without identifying any buyers.
Vodafone, which acquired its 3.2 percent stake in the telco in two transactions between 2000 and 2002 for US$3.25 billion, doubled the value of the investment through the sale.
Hong Kong-listed China Mobile tumbled 3.9 percent to close at HK$78.90, compared with the Hang Seng Index's 1.5 percent drop yesterday.
"The company received Vodafone's notification today (Wednesday) that it has sold its China Mobile shares," the telco said in a statement. "China Mobile and Vodafone have established close cooperation in business and technology since 2000. Both sides will continue to cooperate in these areas in the future."
Vodafone's lock-up period on its 3.2 percent stake in China Mobile recently expired, and though the company signaled it would sell, the timing had been unclear.
The sale was part of Vodafone's new strategy to exit non-strategic minority investments, which analysts and investors believe have weighed on Vodafone's overall value in recent years.
Vodafone has minority stakes in operators in Poland, France and India which it might also sell, according to Reuters.
Analysts were still optimistic about China Mobile's performance despite the stake disposal.
"We do not expect a meaningful fundamental impact from the stake sale, given the shares are secondary and Vodafone's operational influence has historically been limited by the small size of the stake,'' Goldman Sachs said in a report.
The United States investment bank held China Mobile's target price at HK$93, 17 percent higher than yesterday's price.
Deutsche Bank set a target price of HK$86, which has almost 10 percent margin to move up.
China Mobile now occupies 70 percent share of the telecommunications market in the country, a situation that rivals may find "impossible to catch up within two or three years," industry officials said.
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