The deal will reportedly make China Mobile the world's second largest operator in subscriber numbers after British-based Vodafone Group, which has 59 million subscribers. Vodafone Group will invest 2.5 billion US dollars in China Mobile as part of financing for the deal and for a planned strategic alliance in China in mobile services, technology, operations and management.

The alliance commits China Mobile and Vodafone to exploring further opportunities for joint ventures and equity-based alliances elsewhere in China, including potential alliances outside the country.

"I am very optimistic about the tie-up between China Mobile and Vodafone, in particular the data transmission business they are going to develop in China," Arthur Law, a telecom analyst with Core Pacific Yamaichi International, said. The two companies unveiled a plan to develop third generation mobile phone technology, which Law said will help boost data transmission operations. "With the 3G technology, we expect data transmission will take about 50 percent of the mobile business in the future," he said. Dealers also said the market was positive on the lower than expected price of 32.84 billion US dollars China Mobile will pay for the acquisition of seven mobile phone networks from its parent in Beijing, Tianjin, Shanghai, Liaoning, Hebei, Shandong and Guangxi, which have a total of 15.4 million subscribers.

They said the announcement generated lots of buying interest after investors realised the size of the placement was small compared to the original estimate for the acquisition of the seven mainland networks. China Mobile will Finance the purchase of the networks from its parent China Mobile Communications Corp. through the payment of 79.29 billion dollars in cash and 176.73 billion dollars in the form of new shares.

The cash portion would be part financed with 500 million US dollars from cash reserves, China Mobile said. The remainder would be funded by an issue of convertible notes worth 600 million US dollars, an international share offering worth 6.6 billion dollars and yuan-denominated bank loans of 1.5 billion dollars. The remaining balance of one billion dollars would be satisfied through internal resources, other forms of funding, or an additional share placement to the parent. The company will hold a 10-day roadshow from October 16 for the international share placement scheduled for the end of the month - the first ever for a mainland telecom firm.