China Mobile Communication Corp (CMCC) yesterday announced its
takeover of Pakistan's mobile phone firm Paktel Ltd for $284
million, marking its first major overseas acquisition.
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Under the deal, CMCC, the parent of Hong Kong-listed China
Mobile Ltd, agreed to acquire an 88.86 percent stake in Pakistan's
fifth-largest mobile operator from Luxembourg-based Millicom
International Cellular SA.
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The acquisition followed CMCC's abortive bid last year for
Millicom, which controls mobile networks in 16 countries across
Latin America, Africa and Asia. The deal was estimated at $5.3
billion and would have potentially represented the largest overseas
acquisition by a Chinese company.
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Marc Beuls, president and chief executive officer of Millicom,
said in a statement that Millicom chose to sell Paktel to CMCC
after a number of parties showed "strong interest"; and that the
deal would enable Millicom to "focus on the 16 markets where we
have already established strong market positions".
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The deal, set for completion next month after regulatory
approvals, marks a big step forward for CMCC, which has shown
increasing determination to tap into overseas emerging markets.
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CMCC is regarded as the most capable Chinese operator to expand
overseas through acquisitions.
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Its Hong Kong-listed arm had 71.4 billion yuan ($9.1 billion) in
hard funds by June 30, 2006.
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Lu Qijun, a researcher with the State-owned Asset Supervision
and Administration Commission, said it was natural for CMCC to
expand abroad to generate new revenue streams.
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"The government has been encouraging telecom operators to expand
overseas to grow stronger and bigger," said Lu, adding CMCC is
well-positioned to tap into overseas markets thanks to its fat
profits.
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CMCC last year generated 285.3 billion yuan in revenues and 96.8
billion yuan ($12.4 billion) in pre-tax profits. The firm had 318
million mobile phone subscribers by the end of last year, up 20
percent year-on-year.
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According to statistics released by the Ministry of Information
Industry (MII) yesterday, China numbered 461 million mobile phone
users by the end of 2006.
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With mobile phone penetration running high in big cities, CMCC
has identified emerging markets including China's rural areas and
developing countries as a major battlefield for new
subscribers.
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Pakistan, with its population of over 160 million but with low
mobile phone penetration standing at just 12.8 percent in 2005,
offers tremendous growth potential.
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Paktel had 1.56 million mobile phone subscribers by October
2006, an increase of 69 percent from December 2005.
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Chinese operators' overseas expansion would benefit domestic
telecoms equipment manufacturers such as Huawei Technologies and
ZTE Corp, gaining a whole new market for their wares.
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"We believe China Mobile's successful acquisition of Paktel
would have a positive effect on our business in Pakistan," said a
Huawei spokesman.
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(China Daily January 23, 2007)
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