How Does China Mobile’s Wireless Business Compare With Its Peers?

CHL: China Mobile logo
China Mobile

China Mobile (NYSE:CHL) dominates the Chinese wireless market with a market share (in terms of subscribers) of about 58%. However, the carrier has been underperforming its smaller rivals, China Telecom and Unicom, over the last two years, as they bolstered 4G coverage and launched new plans targeted at heavy data users. In this analysis, we compare and contrast China Mobile’s key wireless metrics with its rivals. We also examine how the company’s wireless business impacts its overall earnings and Trefis price estimate.

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China Mobile Dominates Chinese Wireless Market, But Its Growth Is Slowing

  • China Mobile’s wireless subscriber base grew from about 826 million in 2015 to about 925 million in 2018, translating into a CAGR of ~4%.
  • In comparison, China Telecom’s base grew by 15% and Unicom’s grew by about 9%, driven by their expanding 4G coverage.
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Comparing China Mobile’s Revenues With Its Rivals

  • Wireless service revenues stood at about $77 billion in 2018, compared to levels of around $25 billion for China Telecom and China Unicom.

Comparing Wireless ARPUs

  • While China Mobile’s wireless ARPUs are higher than China Unicom’s, coming in at about $6.9 in 2018, they are below China Telecom’s ARPUs, on account of a weaker 4G subscriber mix.

How China Mobile’s Wireless Services Business Impacts Its Stock Price

Step 1: Estimating China Mobile’s Wireless Revenues

We estimate that China Mobile’s wireless revenues will grow to about $82 billion in 2019, driven by slightly higher ARPUs and an expanding subscriber base.

Step 2: Estimating China Mobile’s Total Revenue

We estimate that the company’s total revenues will stand at about $117 billion in 2019.

Step 3: Estimating Net Income

We estimate that net income will stand at about $20 billion in 2019 and about $19 billion in 2020.

Step 4: Calculating China Mobile’s EPS

We expect EPS to come in at about $4.9 in 2019 and $4.7 in 2020.

Step 5: Arriving At Price Estimate

  • We are valuing the company at about 12x its projected 2020 results.


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