In an attempt to deepen its push into internet-related services, information infrastructure, marketing and other emerging areas of technology, the world's largest retailer by gross volume Alibaba (BABA) and the world's largest telecom carrier by subscribers China Mobile Communications Corporation (CHL) have signed a strategic partnership.
With the collaboration, Alibaba will be able to seek new growth opportunities in its rapidly growing cloud computing business, which brought in $224 million of revenue according to the company's latest fiscal quarter ended Sept. 30, 2016. The expansion into the cloud market, Internet of Things and smart devices also pose increasing competition for other internet giants like Amazon (AMZN) , Microsoft (MSFT) , IBM (IBM) and Alphabet (GOOGL) which have been leading the worldwide cloud and internet market.
"As Alibaba expands its role beyond the e-commerce platform to provide other mobile services, its collaboration with China Mobile becomes more important. The two need to be coordinated on the delivery of the mobile experience to consumers, especially in regards to advertising, browsing, search, navigation and payments," said Gil Luria, managing director at Wedbush Securities. "This specific agreement appears to be an incremental step in closer cooperation."
There is no equity investment in the strategic partnership according to a source familiar with the matter. More details of the partnership will be unveiled to the public during the China Mobile Global Partner Conference in Guangzhou, China from Dec. 19 to Dec. 20.
The new partnership, signed Dec. 7 in Beijing, came shortly after Alibaba signed a similar deal with China Unicom (CHU) , the country's second-largest telecom carrier last month to cooperate on basic telecommunication services, mobile and industrial internet. The deals show Alibaba's ambition for an all-round expansion while tapping into the commercial potential of 710 million internet users in China.
Back in 2010, Alibaba had already cooperated with China Mobile in areas including tailored internet services and IT infrastructure support such as data centers. On Nov. 21, Alibaba announced its plan to launch four new data centers in Dubai, Tokyo, Sydney and Germany.