Vodafone to Sell Stake in China Mobile
Vodafone Group, the largest mobile phone provider in the world in terms of revenue, is planning to sell their minority stake in China Mobile due to complaints from investors that the company is expanding too quickly. The mobile company may also be selling their stakes in French and Polish companies due to the issue.
It has already been approved by chief executive Vittorio Colao to sell the 3.2% stake, or 642 million shares, in China Mobile for over US$6.2 billion as their first step in signing off assets. This is set to happen starting this month and comes after they weighed investors’ opinions.
Vodafone spent US$2.5 billion on buying a 2.18% stake in China Mobile in November 2000. Then 2 years after that, they put in another US$750 million to boost the stake to 3.27%. It was the company’s aim to become one of China Mobile’s strategic investors and look for an opportunity to suddenly raid the telecommunications market. The market cap of the shares reached as much as US$13 billion, and Vodafone’s investment return has more than doubled within 10 years.
It’s believed by some that Vodafone won’t find it hard to find buyers for the stake, as China Mobile is listed on the stock exchange in Hong Kong. However, they won’t sell the stake quickly since they are partners in technology, so they will be patient and find suitable institutional investors. If they successfully spin off the minority hold, Vodafone will finance about US$15.57 billion to repay debts, repurchase shares and turn in taxes.