China Unicom (NYSE:CHU) recently announced its operational data for the month of September, 2011. It now has 189 million mobile subscribers after adding 2.9 million more to its mobile business in the last month, of which 2.4 billion were additions to its 3G business. Also, broadband subscribers increased to almost 55 million with September seeing a net increase of 0.78 million. China Unicom is an integrated telecom service provider, offering both mobile and landline services in China. The company derives its value mainly from its mobile business and landline broadband business and competes with China Mobile (NYSE:CHL)
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Increase in number of mobile users
Net additions to the mobile business were 2.1 million for July and 2.4 million for August, implying monthly growth of 11% and 24% respectively. The company enjoys technological competitive advantage as it has the license to operate its mobile network on the WCDMA technology. Also, presently, it is the exclusive official carrier of the iPhone in China. The number of users of China Unicom has thus been steadily increasing and will help the company to increase its market share.
Broadband business fostering
The number of subscribers of broadband internet increased by 0.67 million in July and 0.77 million in August, implying a monthly growth of 15% and 2% respectively. The company had taken various initiatives to encourage greater broadband usage and also to enhance customer experience. Large scale capex was carried out for improving network coverage and marketing spend had also been increased for promotion of its integrated services.
Our price estimate for China Unicom stays at $22, implying an upside to the current market price.
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