China Mobile Limited
), the largest wireless carrier in the world by subscriber base,
intends to sell 100 million mobile phones in 2013 with almost 80%
of it in smartphones. This indicates a remarkable improvement of
25% over 2012 expected sales of 70-80 million units. A potential
deal with the world's second largest smartphone manufacturer
) can be attributable for the raised guidance.
China Mobile covers more than half of the Chinese mobile
market with a subscriber base of 698.51 million at the end of
third quarter 2012. Nevertheless, the company's 3G customers
comprise only 11% (75.6 million) of its huge subscriber base.
Two of its closest rivals -
) - with subscriber base of 229.49 million and 152.62 million,
respectively, lags far behind but have far better 3G customer
concentration than China Mobile. This provides China Mobile a
significant opportunity to tap this under penetrated 3G
China Mobile's biggest flaw is that it offers mobile service
based on Time Division-Synchronous Code Division Multiple Access
(TD-SCDMA) technology, which is not very well supported by the
handset makers includingApple Inc
s iPhone, resulting in lower upload/download speed. However, the
competitors like China Unicom and China Telecom offer their
services through globally acknowledged Wide Band Code Division
Multiple Access (WCDMA)
With nearly a billion cell phone users, China Mobile offers a
huge smartphone market, which is still being dominated by
) Android operating system (OS) and Apple's iOS comes at a
distant second place.
The company has been in talks with Apple for quite some time
in order to develop a TD-SCDMA iPhone, although nothing has been
finalized yet. We believe China Mobile has to strike a deal with
Apple sooner rather than later to have any realistic chance of
achieving its 2013 smartphone sales target.
China Mobile currently has a Zacks #2 Rank, implying a
short-term Buy rating.
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