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China Mobile Acquires Handset Distributor Topssion

Hong Kong Exchanges and Clearing, 3/16/11

China Mobile (NYSE: CHL; 0941.HK) has entered into a share transfer agreement to acquire a 100% stake in Chinese mobile phone and device customization, sales, and service firm Topssion for RMB 237.07 mln. Topssion's existing shareholders include China Mobile parent company China Mobile Communication Corporation (CMCC), which owns a 29% stake, ZTE (16%), Eastcom (15%), Beijing Digital China (15%), Ningbo Bird (15%), and Huawei Investment (10%).

Total consideration will be divided amongst the existing shareholders as follows: RMB 68.75 mln (approximately HKD 81.54 mln) payable to CMCC; RMB 37.93 mln (approximately HKD 44.99 mln) to ZTE (0763.HK; 000063.SZ); RMB 35.56 mln (approximately HKD 42.17 mln) to Eastcom (600776.SH); RMB 35.56 mln (approximately HKD 42.17 mln) Beijing Digital China; RMB 35.56 mln (approximately HKD 42.17 mln) to Ningbo Bird (600130.SH); and RMB 23.71 mln (approximately HKD 28.12 mln) to Huawei Investment. Upon completion of the transaction, Topssion will become a wholly-owned subsidiary of China Mobile Communication, which is, in turn, a subsidiary of China Mobile Limited.

China Mobile believes that the acquisition of Topssion, which it describes as having strong distribution and retail capabilities and sizable sales volume, will help strengthen China Mobile's influence over the value chain, accelerate the maturation of the 3G business, promote the integrated marketing of services and terminals, enhance the value for medium and high-end customers and strengthen its ability to attract new customers.

Topssion is a joint stock limited company incorporated in the PRC, founded jointly by the existing shareholders (as joint promoters) on July 22, 2004. Topssion's total registered capital is RMB 200 mln

(equivalent to approximately HKD 237 mln).

For the eleven months ended November 30, 2010, Topssion's audited net profit after taxation was RMB 3.76 mln (approximately HKD 4.46 mln). For the year ended December 31, 2009, audited net profit after taxation was RMB 21.08 mln (approximately HKD 25 mln).

The completion date of the acquisition is the third business day after the date of the satisfaction and/or waiver of all the conditions precedent for China Mobile to pay the consideration for the share transfer to the existing shareholders as stipulated under the share transfer agreement.

Keywords: 600776.SH China Mobile Eastcom handset vendor Ningbo Bird handset profit wireless 000063.SZ 0763.HK Huawei ZTE CHL Digital China Topssion 0941.HK 600130.SH M&A

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