The Political and Economic Insights - The Deep Meaning of China Mobile and PetroChina's Collaboration

On the evening of November 3rd, an announcement from China Mobile (Shanghai: 600941) (00941) attracted market attention.

The author can only pay attention without understanding the deeper meaning, so I have to paraphrase, with the article originating from "Jinrongjie".

China Mobile Group plans to transfer its 41,981,300 A-share holdings in China Mobile (accounting for 0.19% of the company's total shares) to China National Petroleum Corporation through the transfer of state-owned shares, with a transfer price of 0 yuan.

As an important means of restructuring and reforming state-owned enterprises, free transfers have played a significant role in promoting the liquidity of state-owned assets and optimizing resource allocation.

Now, this major move has also brought China Mobile and China National Petroleum into the spotlight.

\* Free share transfer reappears *

According to the announcement, China Mobile Communications Group Co., Ltd. plans to transfer its 41,981,300 A-share holdings in China Mobile (accounting for 0.19% of the company's total shares) to China National Petroleum Corporation.

The announcement shows that the transfer price per share for this share transfer is 0 yuan, and the consideration is also 0 yuan.

The announcement also explained the background of the transfer - to further strengthen the strategic synergy between China Mobile Group and China National Petroleum Corporation, promote cooperation and development in areas such as information technology and smart energy, and release new potential for digital integration.

Before the transfer, China Mobile Group held a total of 14.932 billion shares in China Mobile, accounting for 69.05% of the company's total issued shares; China National Petroleum Corporation did not hold any shares in China Mobile.

After the transfer is completed, the shareholding ratio of China Mobile Group will decrease to 68.85%, and China National Petroleum Corporation will directly hold 0.19% of the shares in China Mobile.

China Mobile pointed out that this equity adjustment will not have a significant impact on the company's normal production and operation, nor will it lead to changes in the controlling shareholder and actual controller, and the core operating pattern remains stable.

It is worth mentioning that just on October 28th, China Mobile had just completed a "leadership change," with former China Unicom Chairman Chen Zhongyue taking over from Yang Jie.

The first task of the new official is to advance the equity swap between China Mobile and China National Petroleum, indicating the significance of this cooperation.

However, the share transfer between China Mobile Group and China National Petroleum Corporation is not one-way, but a "mutual effort" under the background of strategic cooperation.

On September 2nd, China National Petroleum Corporation, the controlling shareholder of China National Petroleum, planned to transfer 541 million A-shares of China National Petroleum (Shanghai: 601857) (accounting for 0.3% of the total share capital of China National Petroleum) to China Mobile Group through the transfer of state-owned shares, with a transfer price of 0 yuan.

After the transfer is completed, the shareholding ratio of China National Petroleum Corporation in China National Petroleum will decrease from 82.46% to 82.17%, while China Mobile Group's shareholding ratio will increase from 0.10% to 0.39% through the shareholding linkage with its subsidiaries PetroChina pointed out in the announcement that the transfer is to further deepen the strategic cooperation between China National Petroleum Corporation and China Mobile Group, broaden the areas of cooperation, optimize the company's equity structure, and achieve complementary advantages, win-win cooperation, and common development.

\* New Cooperation Model *

The free transfer of state-owned equity refers to the non-compensated transfer of state-owned equity among legally defined entities such as government agencies, public institutions, state-owned sole proprietorship enterprises, and state-owned sole proprietorship companies.

In this regard, the State-owned Assets Supervision and Administration Commission of the State Council has issued a series of documents to regulate and guide the procedures for the free transfer of state-owned assets, including "Regulations on Handling Free Transfer Procedures for State-owned Assets of Enterprises," "Interim Measures for the Management of Free Transfer of State-owned Property Rights of Enterprises," "Guidelines for the Free Transfer of State-owned Property Rights of Enterprises," "Notice on Promoting the Circulation of State-owned Property Rights of Enterprises," and "Notice on Matters Related to the Circulation of State-owned Assets Transactions of Enterprises."

On the surface, the share transfer between China Mobile and PetroChina is merely a free transfer of state-owned assets.

However, a deeper analysis reveals that the "hand-in-hand" cooperation between these two trillion-level central enterprises represents that the country is playing a significant game of digital transformation.

PetroChina is a giant in China's energy sector, holding a large amount of traditional energy resources and infrastructure; while China Mobile is a leader in digital China, possessing strong capabilities in 5G networks, cloud computing, and digital technology.

China Mobile can apply its technological advantages in 5G, artificial intelligence, big data, and cloud computing more deeply into various aspects of PetroChina's oil and gas exploration, refining, pipeline transportation, and gas station management, enhancing production efficiency and safety.

In addition, China Mobile is also accelerating its digital transformation pace, with layouts in computing power, AI, and other businesses.

In May, China Mobile assisted PetroChina in holding a press conference for the construction achievements of the 300 billion parameter Kunlun model, announcing the "Kunlun model."

He Biao, General Manager of China Mobile, pointed out at the press conference that as the general integrator of PetroChina's "Kunlun" model project, China Mobile has formed 14 special working groups to ensure the high-quality delivery of the project.

China Mobile will leverage its technological innovation advantages to jointly explore the paths and methods for the innovative application of artificial intelligence in the energy and chemical sectors with PetroChina, fully supporting the construction of "Digital and Intelligent PetroChina," and deeply promoting AI-enabled new industrialization in the national energy and chemical industry.

In the future, whether to buy China Mobile or PetroChina will continue tomorrow (6th). "Senior Investor Shi Jingquan"

(Investment involves risks, and each investor bears different levels of risk, so independent thinking is essential. The author will buy and sell according to market conditions.)

*The signed and/or unsigned articles published by "Economic Digest" reflect the author's personal opinions and do not represent the position of "Economic Digest." The role of "Economic Digest" is to provide a platform for free speech