China Mobile, one of China's two major mobile telecoms operators, intends to acquire the China Resources Peoples Telephone Co., Ltd., (HKSE:0331), the fourth-largest mobile telecoms operator in Hong Kong.

According to an announcement made by CR Peoples on October 5, China Mobile (Hong Kong) Limited (HKSE:0941), China Mobile's listing arm in Hong Kong, has signed a memorandum of understanding (MOU) with the main shareholders of CR Peoples, the China Resources Group and Mr. Liang Qixiong.

The China Resources Group has a stake of 48% on CR Peoples, and Mr. Liang (including affiliated parties), 18.54%.

Negotiations are still at the initial stage now, with no mandatory provision having been formed, said CR Peoples.

Related sources with China Mobile also confirmed the MOU on October 6.

CR Peoples, the fourth largest mobile telecom operator in Hong Kong, had recruited a total of 1.21 million mobile phone users by June 30, 2005, occupying a market share of 15.3%.

If the deal is clinched, it will be the first time for China Mobile to set foot on a telecoms market outside the mainland of China.

A successful acquisition will indicate a new stage for the economic mergence between the mainland and Hong Kong, said market analysts.

The acquisition will bring CR Peoples considerable synergistic effects and help realize professional management of state-owned assets.