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China Mobile

China Mobile Ltd is a state-owned telecom providing mobile voice and multimedia services through a nationwide mobile network. It is listed in New York and Hong Kong and is the world's largest mobile phone operator with about 655 million subscribers as of January 2012.

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HKTV feud may end in big payout for Wong

Legal experts say China Mobile would face heavy compensation costs to break HK$142m contract to sell online Hong Kong subsidiary

PUBLISHED : Tuesday, 07 January, 2014, 12:41am
UPDATED : Tuesday, 07 January, 2014, 9:23am

China Mobile will have to pay hefty compensation to HKTV boss Ricky Wong Wai-kay to break his deal for the company's Hong Kong online television subsidiary, legal experts warned yesterday.

The state-owned communications giant has launched a probe into the HK$142 million deal, saying it might have violated mainland rules.

It is investigating why the mainland agency that administers Beijing's assets was not notified before the deal was signed.

Meanwhile, the controversy took a new twist yesterday when Wong confirmed he had applied for a judicial review of the Hong Kong government's decision not to award his firm a free-to-air television broadcasting licence.

Critics say that the government's refusal and now the furore over the deal with China Mobile - which would give Wong control of a fully functional mobile TV operation in Hong Kong - are signs of a conspiracy to shut him out of the city's broadcasting industry.

Wong's deal was completed on December 20 and HKTV said in a statement to the Hong Kong Stock Exchange yesterday that it does not anticipate any change to this position.

Wong said the investigation was "none of his business" and HKTV would launch on July 1. He said the probe applied only to state-owned companies while HKTV is a Hong Kong company. Legal experts also said the deal was not subject to ratification by the mainland authorities. And they said for China Mobile to break it would require a big compensation payout or could leave the company facing a lawsuit.

Wang Qinghua, senior partner of Shanghai-based Allbright Law Offices, said: "When a contract is signed and takes effect, it is binding on both parties.

"Internal disputes on any one side will not stop the deal from completing." And Francis Lun, managing director at Lyncean Securities, said there was no way to reverse the deal as it was already sealed. He said: "The [China Mobile] statement looks like a joke. I can't imagine that the parent company will be unaware of an important deal like this involving its subsidiary."

China Mobile announced on its website on Sunday that subsidiary China Mobile Communications Corporation (CMCC) would launch an internal investigation "regarding the share transaction between China Mobile Hong Kong Corporation and a certain television network company in Hong Kong".

The probe would find out whether the transaction complies with the regulations of the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), as well as the internal management system of the company.

A source with knowledge of the deal's terms told the Post there was a strong chance HKTV would be offered a compensation package to call off the deal if SASAC found it problematic.

Priscilla Lau Pui-king, a Hong Kong deputy of the National People's Congress, said mainland regulations require state-owned enterprises - even if they are listed companies - to seek SASAC approval on "major matters", including divestments.

Based on the information available, that step had been missed. "It was indeed very strange. Why would it bypass [the commission]?" Lau asked.

A source familiar with the matter said China Mobile's announcement showed it was not aware of the Wong deal.

"China Mobile's launch of the internal probe on the transaction might be due to its fears that the commission might consider China Mobile Hong Kong a state-owned asset," the source said.

Additional reporting by Gary Cheung and Vivienne Chow



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He said: "The [China Mobile] statement looks like a joke."

It looks like a joke because mainland law is a joke. Mainlanders think signed contracts are "for reference only" and love to change the terms of a deal after a contract is signed, but fortunately that's not how it works in HK.
This is real sad as China, as a country, has always honoured its treaties and contracts. Now, apparently, just because they are afraid of not being able to contain the media in HK they resort to dishonoring contracts. I am afraid this will reflect poorly on its international image. Businesses are likely to lose faith in companies that have possible connections with the state.
Something is very wong here...
Compensation aside, its more a smack in the face for Beijing and the HK Government. CY had stated that there were no political considerations at work in its decision to deny HKTV a licence but now he will find it tough to rebut the naysayers.
A judicial review shall be launched by Ricky. I would like to see how this one unfolds.
So a publicly listed company in HK is in reality a 'state-owned asset' controlled by the Chinese Govt. according to China!!
Where does that leave all mainland companies and their subsidiaries listed on the HK market? Are they privately or publicly owned and is the whole idea of an IPO of a 'China' company a sham and a fraudulent money-grab?
It cuts the ground from right under the feet of the HKSE in particular and HK as a whole.


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