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  • Apr 19, 2014
  • Updated: 3:47am

China Mobile poised to buy into Pudong lender

PUBLISHED : Thursday, 04 March, 2010, 12:00am
UPDATED : Thursday, 04 March, 2010, 12:00am

China Mobile is close to buying a stake in Shanghai Pudong Development Bank in a deal that could spur adoption of the carrier's mobile payment system across the mainland.

Chairman Wang Jianzhou yesterday confirmed that negotiations for the acquisition and potential strategic co-operation with the bank are nearing completion, following much media speculation over the past week.

'We will combine our efforts to develop an online payment service that would be like having an Octopus card-like system in a mobile phone,' Wang said in a video-conference call from Beijing.

Hong Kong's Octopus card system was launched in 1997 to collect MTR fares. Use of this rechargeable, contactless debit smart card has since been expanded to electronic payments in various retail environments, such as convenience stores and fast-food restaurants.

Wang said: 'We need a dedicated partner in the banking field to help us roll out the mobile payment business.'

China Mobile gave no details of the deal in a statement to the Hong Kong stock exchange.

The world's largest wireless network operator with 522.3 million subscribers as of December, is expected to invest up to 40 billion yuan (HK$45.42 billion) to obtain roughly a 20 per cent shareholding in the mid-sized Shanghai bank, according to a report published by brokerage China International Capital Corp this week.

It estimated China Mobile could generate about 400 million yuan in interest income each year, assuming 200 million of its subscribers each had a balance of 100 yuan in their mobile payment account.

The operator has rolled out pilot mobile payment operations on the mainland over the last three years, during which time it has been studying potential strategic partners, according to Wang.

He pointed out, however, that a partnership with the Pudong Development Bank will not be exclusive. 'We will form other partnerships with other banks in future,' he said.

Michael Clendenin, managing director at research and consultancy firm RedTech Advisors (China), said China Mobile's RF-SIM mobile payment technology is being used at outlets of McDonald's and Starbucks, and at the supermarket chain Wumart.

A Morgan Stanley report yesterday described the bank deal as 'a negative' for China Mobile, 'given that mobile banking has not given Asian telecoms operators much meaningful revenue and profit upside'.

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