People’s shareholders approve China Mobile buyout offer

13 Jan 2006

Private shareholders of Hong Kong-based cellco China Resources People’s Telephone Company (People’s) have accepted a buyout offer from China’s mobile market leader China Mobile (Hong Kong) Ltd, both companies confirmed this morning. Last October China Mobile offered to buy out the entire share capital of People’s for HKD3.38 billion (USD436 million), or HKD4.55 (USD0.587) per share. In a statement to the Hong Kong stock exchange, the pair said they received acceptances from 99.68% of People’s shareholders, above the minimum 90% needed.

China Mobile said earlier that the takeover of People’s is an opportunity to enlarge its footprint in Hong Kong, and could create synergies in procurement, marketing and product development. China Mobile’s original offer in early October 2005 saw it bid HKD2.25 billion (USD290 million) to buy a 66.5% stake in People’s. The offer was successful and led to China Mobile making a general offer for the rest of the company.

In May 2005 People’s announced that it would invest most of its 2005 capex on increasing capacity for cheaper pre-paid voice services, rather than launching new data services. The move was in contrast to the high profile launches of 3G networks by four of its domestic rivals, and signalled People’s decision to cater to the lower end of the market.