China Mobile buying Phoenix stake to add 3G content: sources
China Mobile is set to announce today it will acquire a 20 per cent stake in Phoenix Satellite Television from Rupert Murdoch's News Corp in preparation for the launch of 3G phone services, say sources familiar with the deal.
The deal would help China Mobile offer TV content to mobile-phone users, the sources said.
China Mobile, the world's largest mobile-phone service provider, is expected to pay cash for the shares, valued at more than $1 billion. The deal marks the start of the company's bold attempt to become the world's leading player in TMT (telecommunications, multimedia and technology).
At present, News Corp has a 38 per cent stake in Hong Kong-based Phoenix, China's most successful television broadcaster. It was unclear last night what Mr Murdoch, the chairman of News Corp, intends to do with the media giant's remaining 18 per cent stake.
Rumours began to circulate in February that Mr Murdoch intended to pull out of News Corp's joint venture with Phoenix because of the tight controls on China's media market.
Mr Murdoch reportedly felt Phoenix had not done enough to push News Corp's own expansion into China.
He said in September that his company had 'hit a brick wall in China'.
But last night industry sources said Mr Murdoch was expected to release a statement endorsing the deal - a signal that he is unlikely to sell the remaining stake any time soon.
They said having China Mobile as a partner in Phoenix TV could help News Corp's expansion plans on the mainland - assuming he has not given up his hopes on China.
The deal is expected to cause ripples in the market since it will not only help give China Mobile an advantage in 3G but also lead to more convergence deals. China's telecom services providers are bracing for a major industry shake-up in preparation for the introduction this year of standards for third-generation mobile phone services.
Phoenix will be the biggest winner from the alliance with cash-rich China Mobile since it will provide resources for expansion.
Officials from China Mobile, Phoenix TV and News Corp were not available for comment.
