UPDATE 2-Vodafone starts China Mobile stake sale-sources

* Vodafone could end up selling whole of stake-sources

* Banks pitching for the mandate-sources

* Sale part of Vodafone’s plan to exit non-core investments

(Adds details, background)

By Denny Thomas and Kate Holton

HONG KONG/LONDON, Sept 7 (BestGrowthStock) – Vodafone (VOD.L: ), the
world’s largest telecom operator by revenue, launched the sale
of its 3.2 percent stake in China Mobile (0941.HK: ) on Tuesday,
sources with direct knowledge of the process told Reuters.

The entire stake is worth $6.7 billion, based on China
Mobile’s last traded price, though it was unclear how much of
the stake was on sale as of Tuesday.

Two people familiar with the matter said Vodafone could end
up placing the whole of its stake.

The planned sale is part of Vodafone’s strategy to exit
non-strategic investments which analysts and investors believe
have hit the firm’s overall value in recent years.

Vodafone declined to comment. China Mobile could not be

People familiar with the matter said eight banks including
Goldman Sachs, UBS, Bank of America Merrill Lynch, JP Morgan,
Morgan Stanley and HSBC were pitching to arrange the placing,
managed by corporate adviser Rothschild.

The planned exit comes after Vodafone’s lock-up period on
the China Mobile stake ended recently.

Vodafone has seen the value of its stake more than double
since it purchased it in two tranches between 2000 and 2002 for
a total of $3.25 billion.

China Mobile shares are up 12.5 pct in 2010 compared with a
2.2 percent fall in the broader Hong Kong Index (.HSI: ).

And analysts had said it would be one of the easier minority
stakes for Vodafone to sell, compared with other possible
disposals such as its 44 percent stake in France’s SFR and its
45 percent holding in Verizon Wireless, which only have one
possible buyer each.

Despite China’s position as the world’s biggest mobile
market, with nearly 800 million subscribers, growth for China
Mobile and its competitors has also been slowing as revenue from
voice calls declines amid increasing cellphone penetration

Vodafone said in July it was reconsidering its strategy on
holding minority stakes in companies, prompting speculation it
would look to sell or spin off its stakes in operators in
countries including France, the United States, Poland and China.

Senior bankers said Vodafone was not under pressure to sell
assets to shore up its balance sheet or improve cashflow.

Its shares were flat at 159.7 pence at 1539 GMT after being
down in earlier trading.

All of the banks either declined to comment or were not
immediately available for comment.
(Additional reporting by Michael Flaherty, Victoria Howley and
Quentin Webb; Editing by Will Waterman and David Cowell)

UPDATE 2-Vodafone starts China Mobile stake sale-sources