Shanda Interactive Entertainment Holdings Ltd is in talks with Sun Media Investment to launch a joint venture focused on mobile gaming.

"Sun Media invited our mobile game subsidiary Digital Red to discuss the possibility of forming a mobile game joint venture as a strategic partner," said Shanda spokesman Zhuge Hui. "We were in talks with them but have not yet reached any agreement."

The possible cooperation between Shanda and Sun Media was first reported by China Business Post, a newspaper owned by Sun Media.

It said in an earlier news report that Shanda and Sun3C, a subsidiary of Sun Media, will soon clinch an agreement under which Shanda will inject its mobile gaming subsidiary Digital Red, Actoz Soft and its network PC game platform Haofang into a joint venture with Sun3C.

Sun3C, the British AIM listed company, only last month finished its 10 million yuan acquisition of Dublin-based mobile game developer Upstart Games, the world's third-largest mobile game provider, taking over Upstart's business in 26 countries.

If an agreement is reached, according to the report, the new joint venture will become the world's largest mobile game provider in terms of business geography coverage.

However, a later report from China Business Network Daily said Chen Tianqiao, chairman and CEO of Shanda, was unhappy about the unexpected disclosure of the agreement and Shanda's possible cooperation with Sun3C was still not sealed.

Wu Gang, former CEO of Shanda's Digital Red, said in the report that Shanda is unlikely to give up Digital Red due to its great importance to Shanda's overall strategy.

As the biggest online game company in China, Shanda is eager to expand into the mobile gaming market.

In 2004, Shanda finished its acquisition of Digital Red, one of China's top mobile game providers and took control of Actoz Soft, one of the top online game providers in South Korea.

According to International Analysys, revenue from the mobile game market in China reached 1.43 billion yuan in 2005, an increase of 78.3 percent year-on-year. By 2010, the research institution estimated, revenue from China's mobile gaming market will reach 9.53 billion yuan.

Editor: Yan