People's Republic of China - the biggest telecom market in the
world by subscriber base has set an ambitious goal for the
forthcoming year. Additionally, the East Asian country expects 3G
subscribers and broadband Internet to collectively propel growth
in 2013. According to China's Ministry of Industry and
Information Technology (MIIT), the country expects to add 100
million 3G subscribers with the number of broadband Internet
users to increase by 25 million in the coming year.
According to International Data Corporation (IDC), the
smartphone shipment in China has hit a new record by adding more
than 60 million customers in the third quarter of 2012,
translating into a sequential growth of 38%. Based on this
increased popularity of smartphone, 3G subscription till November
2012 has recorded an annualized growth of 88%.
On the revenue front, the telecommunication industry in China
expects an 8% annual increase, which is even better than the
third quarter GDP growth rate of 7.4%. According to MIIT, the
reduction of service fees, improvement of service quality and
allowing more private capital to enter the market have
contributed to the impressive growth.
Moreover, a deeper analysis throws light on the fact that at
the end of November, China had 1.1 billion mobile phone users of
which only 220 million were 3G subscribers. So, this provides a
significant opportunity for the Chinese carriers to tap this
under penetrated 3G market.
China Mobile Limited
), the largest wireless carrier in the world by subscriber base,
came up with its 2013 target of selling 100 million mobile phones
in 2013. A potential deal with the world's second largest
smartphone manufacturer -
) to sell iPhone5 was mainly attributable for this raised
China Mobile has been in talks with Apple for quite some time
in order to develop a TD-SCDMA iPhone, although nothing has been
finalized yet. Additionally, the company is planning to offer
) Lumia 920T at a very low cost, which is expected to increase
its 3G customer base even further.
Nevertheless, China Mobile, which covers more than half of the
Chinese mobile market, has so far been successful in penetrating
only 11% of its huge subscriber base. Two of its closest rivals,
China Unicom Limited
China Telecom Corp.
), which offer iPhone have a far better 3G customer concentration
than China Mobile. In November 2012, China Telecom and China
Unicom registered 5% and 4.6% sequential growth,
We believe that with a billion plus population, a steady per
capita income and a higher smartphone adaptation rate, the target
to achieve 100 million 3G customers is quite realistic.
Additionally, with a mere 20% 3G penetration rate along with a
probable chance of China Mobile and Apple Inc. joining hands,
the target looks quite reasonable.
China Mobile currently has a Zacks #2 Rank, implying a
short-term Buy rating.
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