Vodafone to sell €4.9m China Mobile shares

Mobile phone giant Vodafone is planning to sell its shares in China Mobile - the world’s biggest mobile-phone operator – for more than €4.9bn, it was reported today.

Investors expect the deal to be approved next month, ahead of Vodafone’s strategy update in November, and the plan has already been given the go-ahead by the company chief executive, Vittorio Colao, the Sunday Times said.

The company must decide whether to find a strategic investor for the stake or to sell the shares on the Hong Kong stock market, where China Mobile is listed.

Vodafone first invested in China Mobile, which has more than 554 million customers, compared to Vodafone’s 347 million customers, in 2000.

The sell-off is one of a number of disposals Vodafone is rumoured to be considering, as it starts a retreat from sprawling international expansion designed to appease investors who believe it needs more discipline.

Bankers and analysts believe Vodafone is likely to sell its near 25% holding in Poland’s top mobile telecoms firm Polkomtel as opposed to buying out the other owners. An initial public offering (IPO) is another option.

The review of strategy follows complaints from investors who believe Vodafone’s position of owning assets it does not control has produced a discount between the shares and sum of the parts.

The Ontario Teachers’ Pension Plan (OTPP), which holds a 0.4% stake, recently accused the firm of having “significant structural and strategic weaknesses”.

OTPP believes Vodafone should realise the value of its minority investments - including a 45% stake in US mobile phone operator Verizon Wireless and 44% of French mobile group SFR, as well as its 3.2% holding in China Mobile.

Vodafone reported second quarter figures last month revealing that service revenues had grown for the first time since the global recession hit.

The company posted a rise of 1.1% to £10.6bn (€13bn) in the three months to June 30 following further robust growth in emerging markets and strong sales of smartphones.