China Mobile falls as Vodafone sells $6.5 bln stake

China Mobile shares fell the most in a year after Vodafone sold its stake in the company for $6.5 bln, nearly double what it paid, but analysts expect the stake sale to have no major impact on the Chinese firm.
Vodafone's lock-up period on its 3.2% stake in the world's largest mobile carrier by subscribers recently expired, and though the company signaled it would sell, the timing had been unclear.
The sale was part of Vodafone's new strategy to exit non-strategic minority investments, which analysts and investors believe have weighed on Vodafone's overall value in recent years.
Vodafone has minority stakes in operators in Poland, France and India which it might also look to sell.
China Mobile shares fell as much as 4.1% and closed down 3.8%, its biggest single day drop in more than a year. More than 740 mln shares traded against an average daily volume of 21 mln shares in the past 30 trading days.
Vodafone shares were down 0.4% in a London market up 0.3%. The company said it plans to return most of the proceeds to shareholders and repay some debt.
Analysts welcomed the disposal, which came earlier than expected, but said the announcement may focus investors attention on other assets such as the 44% holding in France's SFR and the 45% stake in Verizon Wireless.
Both of those will be harder to sell because there is only one buyer in each case.
The bidding process for the shares began on Tuesday and a banking source told Reuters the books for the share placing closed earlier on Wednesday and the stock allocation was still taking place.
Despite China's position as the world's biggest mobile market with nearly 800 mln subscribers, growth for China Mobile and its rivals, China Unicom and China Telecom, has been slowing as revenue from voice calls declines amid increasing cellphone penetration rates.
Last month, China Mobile reported a 7% rise in quarterly net profit to 32 bln yuan.
"China Mobile's prospects depend on when it is going to get a go-ahead for LTE," said Eric Wen, an analyst at Mirae Asset Securities.
Long Term Evolution (LTE), the evolution of its current 3G networks, is not expected to boost sales significantly, but will lower operating and expansion costs.
China Mobile aims to launch LTE in 2012, analysts said.
Telefonica SA has about 8.4% of China Unicom and said in June it would raise its stake in the Chinese company to 10% this year.