RCom, &, China, Mobile, rumors?

Business Standard reported that China Mobile might be interested in taking 5-6% stake in Reliance Communications (RCom). This along with few other collaborations will be happening as per the report.

The company has started talks with China Mobile, the world’s largest mobile company, for strategic alliance and possible equity participation of 5 to 6 per cent. China Mobile has over 450 million subscribers while Reliance Communications has over 70 million. The Chinese telecom giant already has operations in Pakistan, Hong Kong and Taiwan. (Business Standard)

Rcom stock surged in yesterday’s trading following the reports. But, there is no confirmation from either RCom or China Mobile.

Wall Street Journal has this to report :

China Mobile Ltd. spokeswoman Rainie Lei said Monday she isn’t aware of talks between the Chinese company and India’s Reliance Communications Ltd. on forming a strategic partnership, adding that “currently, China Mobile doesn’t have any plan to invest in the Indian telecom market.”

This is not a ‘too good to be true’ rumor. As the telcos have saturated their home markets and want to expand in foreign market. With 450 million subscriber’s China Mobile’s best bet is to expand. It already has presence in Pakistan.

Same logic holds good for Reliance Communication. In fact it looks desperate to get some collaboration going. Be its African ambitions or Chinese collaboration. And RCom needs the money to bid for 3G license.

The problem India has with anything Chinese still persists.