China Mobile parent snaps up Millicom to become global player

25 May 2006

China Mobile Communications Corporation (CMCC), the state-owned parent of China Mobile, the largest cellco in the world by total subscribers, has agreed a deal to acquire Millicom International Cellular (MIC) for around USD4 billion. It is widely expected that the required final regulatory approval from Beijing will be granted. The agreement follows weeks of speculation over MIC’s future, and comes only after rival suitor Investcom dropped out of the bidding, after it was itself purchased by South Africa’s MTN.

The acquisition of MIC marks CMCC’s first investment outside of Asia and only its second outside China; the first came in the fourth quarter of 2005 when it agreed to buy People’s Telephone, Hong Kong’s third largest cellular operator by subscribers, for approximately USD300 million. Despite ongoing soaring demand in its domestic market for mobile services, rumours have circulated for some time that CMCC harbours ambitions to establish itself on the world stage, and the purchase of Luxemboug-based MIC paves the way for entry into 16 developing markets throughout Africa, Central America, South America and South Asia. At the end of 2005 MIC claimed 8.9 million total subscribers (7.7 million proportionate subscribers) worldwide, while revenue for the fiscal year stood at USD1.1 billion, up 18% from 2004.

Despite the clear signal of intent, CMCC’s move changes little in terms of its relative position on the global scene. According to TeleGeography’s Wireless Operator Metrics, the acquisition solidifies its place as the largest cellco in the world by total subscribers, with over a quarter of a billion customers at the end of the first quarter of 2006, but leaves it unchanged as the sixth largest in terms of revenue (USD30.8 billion for fiscal year 2005, including MIC). Ahead of it stand Verizon Wireless (USD32.3 billion) and Cingular Wireless (USD32.3 billion) of the US, Germany’s T-Mobile International (USD35.5 billion), Japanese giant NTT DoCoMo (USD44.8 billion), and Vodafone Group, top of the pile with sales of USD62.6 billion. To find out how to view the full table, as well as the thousands of other financial and operational data points contained in TeleGeography’s Wireless Operator Metrics, please visit:

While CMCC targets overseas expansion, interestingly the reverse appears to be taking place at Vodafone – once the UK’s largest company. After mounting shareholder pressure to formulate a more coherent and strategic approach to its overall business, Vodafone sold Japanese subsidiary Vodafone KK to Softbank earlier this year, and many industry watchers believe the Newbury-based holding company will follow that up by offloading its 45% stake in Verizon Wireless to Verizon, for a rumoured USD50 billion. Vodafone’s massive global expansion began in the late 1990s and continued into the early part of the new millenium, driven by ex-CEO Sir Christopher Gent. However, those days appears to be over, with current CEO Arun Sarin seemingly preferring to take the company more in the direction of fixed line broadband services in countries closer to home, namely Germany (via existing subsidiary Arcor) and the UK, to complement its own cellular offerings. Stay tuned for further developments as they happen.