China Mobile eyes Pakistan
KARACHI, May 30 2006: China Mobile is likely to enter PakistanÂ’s cellular industry as the Asian telecom giant is close to acquiring Luxembourg-based Millicom International – the parent company of Paktel and one of six cellular operators in Pakistan. Telecom sources said Millicom International, which operates both AMPS and GSM cellular services through Paktel in Pakistan, was wrapping up its operations amid rising competition and declining profits.
“There have been talks between the two (China Mobile and Millicom) groups and now it seems the deal between them is a matter of days,” said a source close to Millicom’s Pakistan operations. Millicom entered into Pakistan in early 90s, introducing cellular services in the country. Earlier, the company owned two cellular companies in Pakistan in partnership with local telecom operators but later it offloaded shares in one of the companies to local partner.
He said currently Millicom owned Paktel, which offered both GSM (global system for mobile communications) and AMPS (advanced mobile phone system) cellular services across the country and the transfer of Pakistan’s operations to China Mobile would be part of the deal. Millicom reported around 16 per cent rise in subscribers in the first quarter of 2006, with profit of $33.4 million compared to a loss of $11.3 million a year earlier. The company, with over 10 million subscribers, registered a 20 per cent increase in revenue to $322 million in the first quarter compared with the same period last year.
Millicom authorities in November 2005 announced they were discussing the sale of one of its Pakistani units. In January 2006, following a high number of unsolicited approaches Millicom International announced its board of directors had decided to conduct a review of strategic options for the company and appointed Morgan Stanley as financial advisers.
Sources said the size of Millicom-China Mobile deal had not been disclosed by any party but it would be over $5 billion, the biggest-ever overseas acquisition by the Chinese company.
With more than 250 million wireless customers as of last month, China Mobile is by far the world’s biggest wireless carrier and controls about two-thirds of the mobile market in China. “The move may trigger a new kind of competition in the emerging telecom markets, including Pakistan,” said the source. “China Mobile has built one of the most extensive national cellular networks in the world, covering all of mainland China and the company’s strategy clearly shows its target market is Asia and other emerging telecom markets.”
He said though Millicom’s Pakistan operations were not in a very attractive position, still the country offered one of the best business opportunities to telecom operators, as most of the rural areas were without basic telecom facilities. “By March 2006, Paktel enjoyed 1.004 million subscribers, which ranked the company fifth in terms of market share among six cellular operators with a total 27.34 million cell phone users across the country,” added the source.
He said for China Mobile Pakistan was among emerging markets, which represented a particularly attractive destination for telecom companies as western markets became saturated. “In many developing nations, fixed-line infrastructure is poor and limited in its range, so cellular networks, which are cheaper to roll out than traditional lines, are used as the primary means of communication,” added the source.
Source: The News