Emerging market telecom companies are garnering increasingly
more revenue from mobile internet services
, according to a report from ABI Research.
In particular, the paper indicates that Chinese revenue growth
from mobile internet will increase from less than 23% to 25%.
This is a particularly bullish trend for Chinese telecom
firms. Internet service revenue accounts for more than 40% of
revenue in the more developed Japanese and Hong Kong markets. As
smartphone penetration deepens
in the Mainland Chinese market, Chinese telecom firms can expect
to see similar revenue percentages generated from lucrative
Playing Chinese telecom firms like China Mobile (
), China Unicom (
), and China Telecom (
) not only gives investors exposure to China's fast-growing
middle class, but also provides a good defensive play in the
event of a hard-landing.
Smartphone penetration is unlikely to wane in the event of an
economic slowdown because models are becoming perpetually less
expensive. As more and more of the Chinese middle-class start to
use these devices, Chinese telecoms will profit substantially.
Increased profits from internet services could allow these
companies to increase their already sizable dividends.
Investors looking to play the Chinese telecom space should pay
particular attention to China Mobile. China Mobile offers a 3.78%
dividend, has a trailing P/E of 10.98, and is trading above its
50, 100, and 200-day moving averages.
Also, the company is currently unable to officially offer the
) iPhone on its network. If the rumors that CHL may
soon offer this smartphone juggernaut
are true, the stock could surge higher.
Disclosure: Author and immediate family are net long