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China Mobile looks further afield

CHINA Mobile aims to use US$527 million to acquire stakes in a Taiwan-based telecommunications carrier, a move to expand its overseas markets, China Mobile said today.

The deal is still waiting approval from regulators and it will be the first major direct investment by a Chinese mainland firm into the island.

China Mobile, the world's biggest mobile carrier, plans to pay 17.8 billion New Taiwan dollars (US$527 million), for 12 percent of Far EasTone Telecommunications Co, Taiwan's third-biggest phone company by revenue. The price put a 14 percent premium on Far EasTone's closing price of NT$35.20.

The tie-up will facilitate China Mobile's expansion globally and help it provide more comprehensive services in the domestic and global markets, according to China Mobile's chairman Wang Jianzhou.

"It's definitely not the last (overseas expansion) move by China Mobile and it will continue to seek merger and acquisition opportunities over the world," said Sandy Shen, a Shanghai-based analyst at consulting firm Gartner.

China Mobile has become the world's No. 1 mobile carrier but its 99 percent revenue comes from the domestic market and "that's not the way it should be," said Shen.

Other global wireless giants like Vodafone have joint ventures in up to 20 countries.

From 2009 to 2011, China Mobile has earmarked capital expenditure of 375 billion yuan (US$54.96 billion), despite the global financial crisis.

With continuing strong demand in the domestic market, China Mobile, which has about 400 million mobile subscribers, reported first-quarter net profit growth of 5 percent.

China's mobile phone sales will remain unchanged in 2009 though globally handset sales are expected to drop 10 percent this year, according to US-based Gartner.

The cooperation will enable the company to explore future technological trends in the mobile communications market. Taiwan is in a more advanced stage of development in both 3G technology and value-added data services, a China Mobile statement said.

China issued 3G licenses to three carriers in January - the technology provides users with high-speed Web browsing and film downloads on their phones.

China Mobile started trialing 3G services in April last year and it has attracted only about 600,000 3G users to date, fewer than the new 2G users enrolled each month.

China Mobile has also invested in carriers in Hong Kong and Pakistan.


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