China Mobile has announced its intent to acquire a $284 million 88.9 percent stake in a small Pakistani wireless company called Paktel, which is currently owned by Luxembourg-based Millicom International Cellular. China Mobile's deal with Millicom comes after the Chinese carrier spent a few fruitless years searching for acquisition targets in emerging markets. In some respects the deal is a pittance for China Mobile, which claimed 301.2 million mobile subscribers at the end of last year, while Paktel had about 1.3 million. That makes CM about 200 times larger than Paktel, but the deal is a sign of what's to come.
China Mobile has long had its eye on Pakistan's telecom market: In 2005 it lost its bid to acquire another Pakistani company and last year CM abandoned a possible takeover of Millicom in its entirety. Despite the Pakistani carrier's diminutive subscriber base, it may prove to be an obstreperous asset: Pakistan enjoys intense competition as six operators joust for market dominance. Millicom announced in November that it would either sell or close Paktel's operations, and many believe the market competition in that country was the integral factor.
For more on China Mobile's first foreign acquisition:
- read this WSJ article (sub. req.)