China Mobile set up two major investment companies to carry out capital specialization operations

The mobile communications market is becoming saturated, and operators are making a sideline. Recently, China Mobile (Weibo) established an investment company under the group company and listed company as a centralized management platform for the company's equity investment and capital operation. The sideline nuggets have become an important direction for operators in the background of saturated mobile communication market. China Mobile hopes that relying on investment to make profits is not a harm. How to control risks and make a profitable test will test China Mobile's investment and Operational capability.

China Mobile set up two major investment companies to carry out capital specialization operations Set up an investment company

At the end of 2016, China Mobile Investment Corporation, namely “China Mobile Capital Holding Co., Ltd.” and “China Mobile Investment Holding Co., Ltd.”, was officially unveiled in Beijing.

According to the introduction, China Mobile has set up investment companies under the group companies and listed companies to carry out investment specialization operations and enhance the overall competitiveness of China Mobile. Regarding the operation mode of the investment company in the future, the relevant person in charge of China Mobile told the Beijing Business Daily that the investment company will serve as a centralized management platform for China Mobile's equity investment and capital operation, focusing on the “big connection” strategy and following the “short-board and investment basis”. The direction of building the future, through capital operation, to promote business development, management improvement, capacity building, and gradually establish and improve the industrial ecosystem in line with the company's value chain status.

The data shows that China Mobile ranked 20th in the world's top 500 companies in 2016. In the ranking of global telecommunications companies, China Mobile ranks second in the world after being ranked in AT&T. China Mobile's 2016 interim results report shows that China Mobile's bank deposits amounted to more than 300 billion yuan. This is a lot of money for China Mobile.

Frequent movements in the capital field

In the past ten years, China Mobile has been active in the capital field. The main investment direction is overseas small operators and domestic communication companies. In 2006, China Mobile spent HK$3.3 billion to acquire Hong Kong's China Resources Vanguard. This is the first time that mainland operators have ventured into the telecommunications market outside the mainland. In 2007, China Mobile spent US$284 million to acquire Pakistani operator Pakel. At present, China Mobile has invested in Pakistan. Nearly US$2 billion; in 2011, China Mobile acquired the entire shareholding of its controlling terminal sales subsidiary, China Mobile, for 237 million yuan. The company also became a wholly-owned subsidiary of China Mobile; in 2014, China Mobile invested HK$6.82 billion. Share in the Thai operator True. In 2015, China Mobile listed company announced that its subsidiary, China Mobile Railing and Tietong, reached an acquisition target asset and business agreement with a consideration of 31.88 billion yuan.

In addition to investment in the communications industry, China Mobile has extended its capital to media, finance, technology and other fields. In June 2006, China Mobile's parent company, China Mobile (Hong Kong) Group, acquired a 19.9% ​​stake in Phoenix Satellite TV, which was held by Star Media Group. In 2010, China Mobile subscribed Shanghai Pudong Development Bank for a total of 2.208 billion A shares for 39.801 billion yuan; China Mobile invested US$77.42 million to meet with Cayman Islands Holdings Limited, which is mainly engaged in cross-border e-commerce business, with China Mobile holding 16%. Meanwhile, China Mobile also invested US$50 million to buy China International Capital Corporation IPO. Stocks; In 2016, China Mobile and Zhaorong Investment, Hangxin shares and other joint ventures initiated the establishment of China Merchants Renhe Property Insurance Co., Ltd. Among them, China Mobile plans to invest 1 billion yuan to subscribe for 20% of Renhe Property Insurance, and 1 billion yuan to subscribe for 20% of Renhe Life Insurance, with a total investment of 2 billion yuan.

Industrial observer Hong Shibin believes that the establishment of China Mobile Investment Corporation has made China Mobile's ability in the investment field a big step forward.

Get rid of communication business dependence

Kang Hao, editor-in-chief of Operator World Network, said that China Mobile's investment projects are related to the background of the communications industry. Nowadays, the mobile communication market is becoming saturated, and the telecommunications industry has begun a transformation, entering the entertainment market and the digital media content market, thus getting rid of the dependence on the mobile communication market.

In 2016, international major operators continued to acquire and invest. AT&T and Time Warner reached an agreement that AT&T will pocket the latter for $85.4 billion, setting a record for this year's global acquisition.

According to the GSMA's Digital Ecosystem Economic Benefit Report, in 2015, the global Internet economy value was close to 3.5 trillion US dollars, slightly higher than 4% of the world's GDP. Telecom operators accounted for only 17% of this, about $577 billion. Although Internet connection revenues continue to grow, the share of value gained by telecom operators is declining year after year. US AT&T, BT, and Australia Telecom entered a low-speed development period of less than 3%. The revenues of international operators such as France Telecom, Telefonica, and Japan NTT DoCoMo continued to experience negative growth.

The days of domestic operators are not too good. Take China Mobile as an example. From 2012 to 2015, the company's net profit has been declining, with 129.3 billion yuan, 121.7 billion yuan, 109.3 billion yuan and 108.5 billion yuan.

In Kangxi's view, China Mobile's investment company will invest in large-scale and confident projects that can make money through mutual share reform or IPO, which means that China Mobile faces less risk. China Mobile's 2015 financial report disclosed the business operations of several companies invested by the company: Shanghai Pudong Development Bank's revenue in 2015 was 146.54 billion yuan, an increase of 23.335 billion yuan from 123.181 billion yuan in 2014. China Mobile's dividend was 2.824 billion yuan. The revenue of Keda Xunfei in 2015 was 2.501 billion yuan, an increase of 40.9% from the 1.775 billion yuan in 2014, and China Mobile's dividend was 18 million yuan.

However, any investment risks and opportunities coexist. According to some news reports, in 2013, the Audit Commission announced the audit results of China Mobile's 2011 financial revenue and expenditure. It pointed out that since 2005, China Mobile has made six major foreign investment (acquisition) projects, of which the group company bears three losses. The project (accumulated investment loss of 3.186 billion yuan in the past three years), the listed company to undertake three profitable projects (accumulated investment income of 6.217 billion yuan in the past three years).

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