logo.gifNot
quite the transformational deal that the mobile phone industry had been
expecting, but important nonetheless. China Mobile is in advanced discussions to buy Millicom, the mobile operator that specialises in emerging markets, for around $5.3bn.

An
unfamiliar name to some, Millicom nevertheless has more than 9m
subscribers in 16 countries across Latin America, Africa and Asia. If
the deal is confirmed, it would be the biggest Chinese investment
overseas under Beijing's nascent “go abroad” campaign, according to
Reuters. This initiative has spurred several major acquisitions
including Lenovo's $1.75bn purchase of IBM's PC asssets in 2005.

China
Mobile is the biggest mobile operator in China. It has around 260m
Chinese subscribers and is adding 1m new ones each week. Clearly,
domestic growth rates will one day slow and so China Mobile is looking
to international markets to take up the slack. In particular, emerging
markets, as its much easier to grow quickly in developing countries
than in the mature western markets, at least that appears to be the
logic behind the Millicom bid.

Nevertheless, one should not rule
out China Mobile also making a move on a better-known operator in a
developed market. Apart from the “trophy” value of such a deal —
probably a mid-tier GSM operator as China Mobile predominantly uses the
GSM technology — such a purchase would allow China Mobile to also gain
much-needed experience in running 3G services.

China's own 3G
networks are still not up and running due to the government's desire to
wait for a home-grown alternative 3G technology called TD-SCDMA.

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