China Mobile Ends 2014 With A Whopping 90 Million 4G Users

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China Mobile (NYSE:CHL) is growing its 4G subscriber base at a frantic pace, with the carrier crossing the 90 million mark in December. The world’s largest carrier (by subscribers) added about 19 million 4G subscribers in the month, compared to the combined tally of about 3.2 million 3G and 4G additions by rivals China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA) in the same period. December marked the carrier’s best performance in terms of monthly 4G user additions to date, and was likely a result of its revised strategy of focusing solely on promoting its 4G network. Several reports in the media last month indicated that China Mobile had decided to gradually phase out its 3G network in light of waning demand coupled with the roaring success of 4G. Interestingly, despite having been a net loser of 3G subscribers in the previous two months, China Mobile gained over 3.5 million 3G subscribers in December. [1] [2] [3] [4]

The company continues to benefit from the fact that the Chinese government has only recently awarded FDD-LTE 4G trial licenses to carriers, and the smaller players intend to build and expand their 4G networks using the FDD-LTE standard. The lack of FDD-LTE licenses was preventing China Unicom and China Telecom from rapidly expanding their 4G networks in the country since their existing wireless networks (WCDMA 3G) are more compatible with FDD-LTE, unlike China Mobile’s TD-SCDMA 3G network. China Mobile’s 3G network is compatible with the TD-LTE 4G standard, for which licenses were awarded by the government in December 2013. This helped China Mobile grow its 4G subscriber base exponentially from just over 1.3 million users in February 2014 to over 90 million users at the end of December 2014.

We currently have a price estimate of $58 for China Mobile, implying a discount of 10% to the market price.

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China Mobile’s Market Share Dominance

China Mobile’s total wireless subscriber base at the end of December was about 807 million, including about 336 million high speed (3G & 4G) users. The wireless major enjoys a dominant share of 62.5% in the country’s wireless market, reporting an improvement of 30 basis points since the start of the year. It is followed by China Unicom and China Telecom with about 23.2% and 14.4%, respectively. The steady gain in high speed subscribers over the last one year period has helped China Mobile improve its 3G/4G mix from just 25% in 2013 to almost 42% at the end of December 2014.

Chinese Wireless Market-2014

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Notes:
  1. Operation Data, China Mobile, Jan 2014 []
  2. Operating Data, China Unicom, Jan 2014 []
  3. Key Performance Indicators, China Telecom, Jan 2014 []
  4. RIP: China Mobile’s TD-SCDMA 3G network (2009-2014), RC Wireless, Dec 17 2014 []