No China Mobile/MTN talks

By Damaria Senne, ITWeb senior journalist

Johannesburg, 30 Oct 2007

The rumours that China Mobile is set to acquire an MTN shareholding are without substance, say both companies.

US business magazine Forbes reports that China`s largest mobile operator denies media reports saying it plans to acquire a stake in pan-African mobile operator MTN.

"The listed company has nothing to do with this, and as far as we know, the parent has had no dealings relating to any plan to buy MTN," Forbes quotes a China Mobile spokesman.

MTN has also rubbished media speculation that it is in talks with China Mobile regarding selling part of its shareholding.

The local operator initially remained mum on the issue, with spokesman Nozipho January Bardill stating MTN would not respond to media speculation. However, Business Report indicates she later denied MTN was in talks with the Chinese mobile operator.

Local media reports that China Mobile previously showed an interest in acquiring an MTN shareholding. However, the talks, reputedly held last year, did not yield results.

Renewed market speculation emerged this week following Standard Bank`s announcement that the Industrial and Commercial Bank of China would acquire a 20% stake in the bank.

Standard Bank said last week that it would sell the stake for a total of R36.7 billion, of which R20.7 billion would go to shareholders and the remainder to Standard Bank Group.

No need to ask

MarketWorks business advisor Steve Edwards points out that China Mobile does not have to talk to MTN to acquire a small shareholding in the company. "As a publicly listed company, there are enough MTN shares on the market for China Mobile to acquire plenty without their co-operation, if they [China Mobile] thought it important enough to do so," he says.

Edwards adds that if the Chinese mobile operator wants critical mass, it would have to offer enough of a premium to entice institutional investors to sell.

"China doesn`t invest for profit - it invests for economic conquest - so it can get quite silly with the price if it needs to."

However, China Mobile would have to talk to MTN if it wants to acquire a controlling interest in MTN, Edwards says. "But I don`t think MTN would want to accede to that scenario. I`m pretty confident that MTN would be happy to have China Mobile on board as a non-controlling shareholder."

Beyond the money, selling a small portion to China Mobile would allow MTN to gain a further lead on the competition in Africa, where it is king and would like to remain so, says Edwards.

Theoretically, there is also the potential for access to the Chinese markets, he says.

"Such access would be chimerical, I think. If China`s management of the Internet and their pseudo-liberalisation of their media space are anything to go by, they`re not likely to give much of significance to a foreign telecoms partner."

China Mobile has the world`s largest subscriber base, with 349.66 million customers.