Royal Philips Electronics (PHG) has signed a letter of intent to transfer its remaining mobile phone activities to China Electronics Corporation.

CEC will take over the responsibility for Philips' mobile phones business, which currently has an annual turnover of approximately EUR400 million and approximately 240 employees, mainly in Asia Pacific and Eastern Europe.

Under the terms of the letter of intent, CEC will receive a global license to market and sell mobile phones under the Philips brand for the coming five years.

The transaction is still subject to confirmatory due diligence. The transaction will be conditional on all required shareholder, government and regulatory approvals and consents and is expected to be completed by the end of 2006.