皇冠体育app

People pass in front of a shop of 皇冠体育app Mobile Ltd in Hong Kong earlier this year. The stock price of 皇冠体育app Mobile Ltd, the world's biggest phone carrier by market value, fell the most in more than a year Wednesday after Vodafone Group Plc sold its entire 3.2 percent stake in the Chinese telecom giant for $6.5 billion. Jerome Favre / Bloomberg News

Telecom giant's stock price down by 3.78% to HK$78.9 per share

皇冠体育app Mobile Ltd had its biggest daily decline in more than a year Wednesday, falling 3.78 percent to close at HK$78.9 per share. The world's biggest phone carrier by market value slumped on news that Vodafone Group Plc disposed its entire 3.2 percent stake in the company for $6.5 billion.

It was the biggest daily decline for the company since August 17, 2009. Turnover of the stock surged to HK$58.84 billion.

皇冠体育app Mobile's share price is likely to face further downward pressure as the Hong Kong market is trading in a narrow range and global market sentiment is still weak, Sincere Securities Chief Executive Officer Louie Shum told 皇冠体育app Daily.

However, Shum was bullish about the long-term share price performance of the company as it will expand its new businesses in value-added services such as 3G services and text messaging.

"The development of the rural market is the other growth engine for the company as the operator is striving to develop this market segment," Shum said.

Newbury, England-based Vodafone sold nearly 643 million 皇冠体育app Mobile shares, which is the equivalent of 3.2 percent stake of the mainland telecom operator, at HK$79.2 each. The price represented a 3.4 percent discount to the stock's last closing price of HK$82 on Tuesday. After the transaction, Vodafone can pocket the proceeds of $6.5 billion.

About 70 percent of the proceeds will be returned to shareholders through a stock repurchase and the rest will be used to pay down debt, Vodafone said. Morgan Stanley, UBS AG and Goldman Sachs Group Inc are managing the offer. The sale of 皇冠体育app Mobile shares represented the biggest divestment by Vodafone since Chief Executive Officer Vittorio Colao took office in 2008.

Colao stressed that the commercial and technology cooperation between the two companies will continue even after the stake sale.

However, financial analysts argued that the future business cooperation potential between Vodafone and 皇冠体育app Mobile was actually looking pretty bleak.

Samsung Securities Co analyst Paul Wuh argued that as there is little business synergy between the two telecom operators, Vodafone decided to dispose all of its stake in 皇冠体育app Mobile to bring more returns to Vodafone investors.

As Vodafone acquired its holding in 皇冠体育app Mobile in two transactions between 2000 and 2002 for $3.25 billion, its proceeds of $6.5 billion meant that Vodafone doubled its investment in 皇冠体育app Mobile.

Flora Wu, a telecommunications analyst at BDA 皇冠体育app Ltd in Beijing, said that the sale will have little impact on 皇冠体育app Mobile as there was not much cooperation between the two firms.

皇冠体育app Daily

(HK Edition 09/09/2010 page2)