China Mobile’s CNY31.88 billion ($4.98 billion) offer for local firm Tietong will strengthen its fixed-mobile offering and provide complementary network assets.
The Chinese giant is acquiring the fixed line operator from a sister company called CMCC.
The deal, which China Mobile expects to close by the end of this year, will be financed through its own resources, it said in a filing.
Tietong has over 10 million fixed broadband and fixed line customers whose addition will speed up China Mobile’s transformation into an integrated fixed-mobile operator, a necessary move to better compete with peers increasingly offer bundled packages.
China Mobile said providing bundled services reduces churn as well as improves user loyalty.
The deal also provides the company with complementary network assets, including an extensive metro fibre network and backbone network. The additional infrastructure will increase China Mobile’s fixed network capacity and coverage.
In addition, acquiring an operator with fixed infrastructure also gives China Mobile greater exposure to the smart homes opportunity.
Finally, buying Tietong greatly reduces the transactions between China Mobile and CMCC, which simplifies management and operating structure, it said.