State-run Chinese telecom operator China Mobile may be a step closer to buying a stake in its British counterpart Vodafone as US group AT&T announced on Monday it will not buy the British company, reports the Hong Kong-based Oriental Daily News.
Rumors have spread that the Chinese company plans to buy 5%-20% of Vodafone's shares, since the British company has a strong presence in Africa, a market China Mobile yearns to tap, according to South Africa's Financial Mail.
Vodafone was formerly a strategic shareholder in the Chinese company but sold out its holdings of China Mobile's shares in 2010. The two companies have remained on good terms and jointly bid for a mobile phone license in Myanmar last year.
AT&T revealed it has no intention of buying Vodafone in response to a British supervisory body's request. The company is said to have made the decision after making contact with EU communication officials.
China Mobile has not responded to the rumors nor revealed whether it will take the opportunity to buy a stake in Vodafone, which could involve HK$72.1-$288.6 billion (US$9.2-$37.1 billion). The huge amount of money could influence China Mobile's decision.
The decision may also be affected by a potential dip in China Mobile's and other Chinese telecom operators' profits, which may be reduced by 10%-20%. China is set to replace corporation tax with value-added tax in the telecommunication sector in April, which may increase telecom operators' tax rates from 3%-11%.