Underperforming Shares

"Any investment will help increase our earnings per share," China Mobile's Wang told reporters in Hong Kong during a teleconference Wednesday from Beijing. The carrier needs "deep support" from a financial firm to develop its electronic commerce and payment business, he said.

Alipay, owned by Hangzhou, East China-based Alibaba Group, controls almost 60 percent of China's online-payment market, according to its Web site. Chinese consumers bought more than 180 billion yuan of goods and services on the Internet last year, according to Fang Meiqin, research director at BDA China Ltd, a Beijing-based telecommunications industry consultant.

The value of e-commerce transactions settled using mobile handsets will probably increase to more than 7 billion yuan by 2013, according to BDA.

"It will become much more convenient for China Mobile to offer electronic payment services if they have an alliance with a bank," said Fang. "In China, technology companies don't have the necessary licenses to offer financial services."

A deal with Pudong Bank wouldn't undermine China Mobile's ability to partner with other lenders, Wang said.

Calling the Shots

"I don't know what strategically that would provide to China Mobile," CIMB's Lai said. "As the leading player in the market, they can theoretically call the shots and partner with anybody."

China Mobile wouldn't be alone in investing in financial firms. South Korea's SK Telecom Co last year agreed to buy a stake in Hana Financial Group Inc's credit-card unit for 400 billion won ($349 million), while Globe Telecom Inc. in the Philippines agreed to buy 40 percent of BPI-Globe BanKO Savings Bank in 2008. Nokia Oyj, the world's biggest maker of mobile phones, last year bought a minority stake in Obopay, a supplier of mobile banking services in the US and India.

China Mobile started allowing some users to pay bills with their handsets last year, and began providing other services such as mobile television and electronic readers, Chairman Wang said in November. The company is expanding its range of value- added services as competition intensifies with rivals China Telecom Corp and China Unicom (Hong Kong) Ltd.

Stimulus Package

Pudong Bank, with 491 outlets nationwide, is seeking to boost financial strength after expanding loans by 30 percent in the first nine months of last year to support China's 4 trillion yuan economic stimulus package. The Shanghai-based lender in September raised 15 billion yuan in a private placement to ensure it has enough capital to meet loan demand and regulatory requirements.

China Mobile Communications, which owns 74 percent of Hong Kong-listed China Mobile, bought a 19.9 percent stake in Phoenix Satellite Television Holdings Ltd. in 2006. A year later, the phone company acquired Paktel Ltd, a wireless carrier in Pakistan, its first purchase outside Chinese territories.