China Mobile is set to be among the final bidders for Millicom International Cellular, a Nasdaq-listed mobile phone operator focused on emerging markets.
Its offer of about US$4bn is the latest sign of the desire of Chinese state groups to expand abroad, and highlights their growing interest in buying rivals in developing markets after a series of disappointments in Western countries. People close to the situation said the deadline for the second round of bids for Millicom, which put itself up for sale in January, had been set for the next few days.
A purchase of Millicom, which has nearly 10m subscribers in 16 countries in Latin America, Africa and Asia, would mark the first overseas foray by a Chinese state-owned telecom group.
They added that China Mobile, the state-owned parent of the Hong Kong-listed group of the same name, and up to six other groups would table offers. Potential buyers of Millicom, which is controlled by the Swedish telecoms and media group Kinnevik, have been carrying out due diligence on the group’s finances for the past few weeks.
The Chinese government has been encouraging overseas expansion by leading state companies under its “Go Global” policy, which aims to ensure that they will be able to compete with US, European and Japanese multinationals in the long term.
However, many Chinese executives are aware that it could be difficult to break into developed markets where they have little competitive advantage.
Instead, they have focused on opportunities in developing countries.
Industry observers said that China Mobile would face stiff competition for Millicom, with Egypt’s Orascom, Dubai-based Investcom and Kuwait’s MTC, as well as Norway’s Telenor and Mexico’s America Movil all interested in the company.
Vodafone, the UK mobile operator, is believed to have lost interest. Shares in Millicom have risen more than 70 per cent since January when it announced it had appointed Morgan Stanley to review its options after receiving several unsolicited bid approaches.
At yesterday’s close of US$48.13, Millicom had a market value of more than US$4.7bn.
The company, which had sales of US$1bn and net income of US$10m last year, is due to report first-quarter results on Wednesday.
China Mobile and Millicom declined to comment.