China Mobile Communications Corp, the parent of the world's most valuable phone company, will use "patience" in its overseas expansion plans.
Instead, the carrier will focus on winning clients in rural areas of its home market, Bloomberg News reported.
"The problem now is that prices of phone companies in emerging markets are too expensive," company President Wang Jianzhou said at the meeting of the World Economic Forum in Davos, Switzerland, yesterday.
"We're not in a hurry, we have patience."
The Beijing-based company, which has more customers than the US population, hasn't made any purchases abroad since last year's US$284 million takeover of Pakistan's Paktel Ltd. Chinese mobile-phone users jumped 17 percent in the first 11 months in 2007, the second-fastest growth among major wireless markets after India, led by demand from smaller towns and villages.
"It's not in their interest to be all that aggressive if there is nothing to buy and it's not their first priority," Jeffrey Tan, an analyst at Credit Suisse Group, said. "There is a lot of potential in the rural market where there is a low penetration rate, as long as they can keep the costs down."
China Mobile Communications owns almost 75 percent of Hong Kong-listed China Mobile Ltd, whose shares fell 3.5 percent to close at HK$116.10 (US$14.87) in Hong Kong yesterday. The stock has dropped 16 percent this year after doubling in 2007.
Tan rates shares of the world's biggest mobile-phone company by users as "outperform" with a price estimate of HK$153.
China Mobile's US$298 billion in market capitalization makes it the world's most valuable phone company, according to Bloomberg data.
The carrier added 68.1 million users in China last year for a total of more than 369 million. Smaller rival China Unicom Ltd had about 160 million customers.
"Growing in big cities has become more difficult, therefore our focus is on mid- and small-sized cities and rural areas," Wang said. "Last year, more than 50 percent of new users came from rural areas. This year it will still be the case."
China's government has urged local technology companies to increase investments in African and Southeast Asian nations that the country is deepening ties with. Wang said in April of last year that China Mobile Communications planned to acquire companies in Africa and Southeast Asia.
(Shanghai Daily January 25, 2008)
