Thursday March 11, 2010
China Mobile takes bank stake for US$5.8B
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10 March 2010 – China Mobile – the world’s largest operator by subscribers – is to buy a 20 percent stake in Shanghai Pudong Development Bank for US$5.8 billion and enter into a strategic cooperation with the bank, confirming recent speculation. China Mobile will become the second-largest shareholder of the bank (after Shanghai International Group) and will subscribe to 2.2 billion Pudong bank shares at CNY18.03, representing a discount of about 13 percent to the closing price of the bank’s shares on 25 February. Guangdong Mobile, a unit of China Mobile, will pay the total consideration of CNY39.8 billion (US$5.83 billion) in cash via internal resources.
In a statement, China Mobile noted that the cooperation agreement will include “joint development of mobile phone payments business, mobile bank cards business, mobile funds transfer business and other forms of mobile finance and mobile e-commerce businesses, the joint research and development of the bundling of other forms of mobile communications and finance products as well as the joint in-depth research and development of new technologies and new products of future mobile finance and mobile e-commerce businesses.” The deal is the operator’s first major investment outside its core telecom business and will see it join carriers in Japan (NTT Docomo) and South Korea that have agreements with banks to offer payment services via mobile phones as a way to generate additional revenue. Most recently, South Korea's biggest telecom operator by revenue, SK Telecom, late last year agreed to buy a 49 percent stake in the credit card unit of Hana Financial Group for US$343 million to introduce products that bundle banking and telecom services. Only last week China Unicom also expressed an interest in developing mobile payment systems. ♠ JC
Source: GSMA
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