China Mobile (NYSE:CHL), the largest mobile service provider in the world, derives most of its revenues from mobile services as well as value added services like data, SMS, mobile Internet, voice mail, etc. Over the years the company revenues from value added services has been increasing as a proportion of the total revenues and in the first half of 2011, this segment saw growth of 18.5% in value added service revenues over the same period last year. We recently launched coverage of China Mobile with a price estimate of $58, which is 20% ahead of the market price. It primarily competes with China Unicom (NYSE:CHU) and China Telecom (NYSE:CHA).
See our full analysis for China Mobile
Subscriber Base
China Mobile had a total subscriber base of more than 616 million by June, 2011, of which more than 90% subscribed to its value added services as well.
Penetration of value added users has been steadily increasing with the increasing popularity of smartphones in China. Smartphone penetration was only about 15% by 2010 in China and presents a large market potential for Chinese telecom providers. Tariffs are largely regulated by the government, keeping prices in check and encouraging greater mobile usage. Declining handset prices and the ease-of-use and convenience of using mobile Internet are helping expand the subscriber base more.
New products and applications
New products and applications are being continuously developed to increase offerings to customers. Expecting it to be the fastest growing segment, the company has also increased promotion spend on their value added services. The promotion of industry specific applications is also being carried out to increase the number of corporate value added customers. China Mobile has also entered into alliances with specific companies like Far EasTone and PhonenixTV to develop original content for value added services.
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