Vodafone has completed the sale of its 3.2% stake of China Mobile for $6.6 billion to a group of banks including Goldman Sachs, Morgan Stanley and UBS, it said yesterday.
The banks will then dispose of the stake, presumably at a mark-up. At yesterday’s share price, the stake was worth some $6.8 billion, so that’s a neat $200 million of easy profit.
Vodafone is briefing that the sale is a sop to its investors, who are tired of the minority investments that the company holds around the world. Since Vodafone has no buyers for it stakes in Verizon Wireless and SFR, it had to throw its investors a China Mobile-shaped bone.
Shareholders are entitled to ask whether the China Mobile stake was a strategic asset which would give Vodafone a potential future partnership, or whether it was merely an equity investment?
The answer, sadly, is that the stake was just an investment. It may have achieved a near 100% return in five years, but it makes sense to return money to investors and allow them to pick their own stocks.
The nagging failure for Vodafone in China is a reminder that the world’s biggest mobile market has no intention, at all, of liberalising.
Mobile communications are an increasingly key part of the government’s security apparatus, as technology gives the Communist Party the ability to screen all text messages for potentially subversive words and probably the ability to screen a good number of calls too.
Would Vodafone ever want to be in such a market, even if it is hugely lucrative? The answer which came yesterday is no.