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December 12, 2023
China's telecom giant China Mobile has splashed out on another company – its fifth major corporate investment this year. In the latest deal it has taken a controlling stake in network security firm Venustech for 4 billion Chinese yuan (US$557 million), taking its total to RMB56.8 billion ($7.9 billion) for the year.
The driver of this latest transaction is the government's preoccupation with 'comprehensive national security', demanding that all businesses and citizens make security a priority. This has been a positive for state-owned companies like China Mobile, who are seen as more trustworthy providers than private firms.
But it means it needs to expand its security portfolio to meet the growing demands of customers, while on the other side of the deal, Venustech badly needs a partner with state sector cred and plenty of upside.
The two companies have been working together for the past 18 months and announced a cloud security partnership earlier this year.
Shenzhen-listed Venustech brings a corporate customer base with a strong presence in government, finance, energy and transportation. It reported earnings of RMB241 million ($33.6 million) on revenue of RMB2.5 billion ($348.3 million) for the first three quarters of 2023.
Huge cash pile
The other important driver of the transaction is China Mobile's huge cash pile – around $25 billion in cash and cash equivalents at the end of Q3.
Earlier this year it paid RMB5.1 billion ($710.6 million) for a 9% stake in US-sanctioned video surveillance firm Dahua Technology, with which it has collaborated on large-scale sensing and video networking.
But the other deals look to be much more financial than strategic. That includes its biggest transaction, RMB45 billion ($6.3 billion) for a 6.8% stake in the China Postal Savings Bank, making it the third biggest shareholder.
China Mobile also took a RMB2 billion ($278.7 million) stake in Phoenix Media in February and a RMB700 million ($97.5 million) share of Eastern Airlines in January.
These aren't the only deals. Besides the big corporate investments, China Mobile's venture arms China Mobile Capital and China Mobile Investment have continued to invest in startups and to take small stakes in partners.
Between them they have built a portfolio of more than 150 companies in key areas such as semiconductors and quantum communications.
China Mobile has further broadened its investment scope with the creation of a RMB10 billion ($1.4 billion) digital transformation fund in Shanghai, focusing on the digital economy and the mobile industry chain.
Read more about:Asia
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