Securities Daily, 11/19/12
China Mobile (NYSE: CHL; 0941.HK) has reportedly made a bid to acquire its Fetion mobile instant messaging business from IT solutions provider Ultrapower (300002.SZ). Zhang Qianshan, GM of Ultrapower's securities department, described the rumors as speculation, claiming that Ultrapower has received no notice from China Mobile, adding that the company is open to the possibility but has not looked into the matter.
Ultrapower chairman Wang Ning previously told Chinese media that the company is significantly undervalued since "Fetion is one of China Mobile's key internet services," arguing that the three-year contracts previously signed between the two companies were already too short, and that while China Mobile's decision to renew on a one-year basis was understandable, it has an adverse effect on speedy development of the service. "Regarding the nature of our cooperation, Ultrapower and China Mobile have a strong strategic partnership, identifying specific content and funding requirements each year in order to further improve Fetion," said Wang.
Ultrapower's one-year Fetion contract with China Mobile expired on October 31, and a renewal announcement has yet to be made.
Editor's Note: For more background on this topic, please see "Ultrapower, China Mobile Renew Mobile IM Service Contract" MD 4/12/12 issue.