China Mobile to buy 20% of Pudong Bank

Yet paying $5.8bln for investment in the bank to dominate country’s mobile market was greeted adversely.

China Mobile will pay $5.8 billion for 20 percent of Shanghai Pudong Development Bank, the company said on Wednesday, a move it hopes will help it dominate the country's nascent mobile e-commerce market.

Investors and analysts have greeted the deal with skepticism, however. Since the deal was first reported in early March, China Mobile's Hong Kong-listed shares have fallen 3 percent, erasing HK$46 billion ($5.9 billion) in shareholder value.

"Going into e-commerce is the right direction but the investment in the bank is totally irrelevant," said Allan Ng, a telecom analyst at BOC International. China Mobile could enter the mobile e-commerce segment through partnerships instead, he added.

Mobile e-commerce allows a mobile phone user to buy and pay for products and services via mobile phone, and is seen as a crucial future source of revenue for telecoms companies.

China Mobile, which has more than 500 million subscribers, said it would subscribe to 2.2 billion Pudong bank shares or 20 percent of the bank, for 39.8 billion yuan ($5.83 billion), and said it will jointly develop mobile finance and e-commerce business with the bank.

View the full story in Reuters.