China Mobile eyes Pakistan expansion
China Mobile's potential bid for a Pakistan telco reflects a its new leaders' continuation of a muddled global expansion policy from the past
This latest word of China Mobile's interest in Pakstan's Warid Telecom comes just a month after China's dominant and extremely cash rich wireless carrier abandoned a much more interesting bid for a telecoms license in Myanmar. But before I go any further with my look at China Mobile's largely ineffective global expansion policy, let's take a look at this latest potential bid in Pakistan.
Industry watchers will know that Pakistan is the only place where China Mobile has made a successful acquisition so far outside its lucrative home base, where it dominates with about two-thirds of the market. Its lack of global investments isn't for lack of trying, as China Mobile has made a number of high profile but failed attempts at other global M&A over the last seven or eight years.
This latest Pakistan move looks like a continuation of China Mobile's confused global expansion policy. On the one hand the move makes some sense, since China Mobile would be able to gain scale in Pakistan by combining Warid with its own locally-based operations, which are marketed under the brand name Zong.
But that said, Pakistan, despite its large population, probably isn't the kind of market that China Mobile should be targeting for its global expansion. While Pakistan is indeed a developing market like China, its political instability and frequent clashes with its neighbours hardly make it a stable place to do business.
Rather than bid for Warid, I would advise China Mobile to follow Abu Dhabi's lead and get out of Pakistan and look for more stable markets like Myanmar with better growth prospects. But China Mobile doesn't seem interested in that kind of strategy, and I expect we may see a continuation of its muddled global expansion program from the past under a new generation of leaders installed at the company last year.
Bottom line: China Mobile's potential bid for a Pakistani telco reflects a its new leaders' continuation of a muddled global expansion policy from the past.
To read more commentaries from Doug Young, visit youngchinabiz.com