China Mobile provides a full range of wireless telecom and value added services in China. It has 70% market share and about 457 million subsribers, which makes it the largest wireless operator in the world.
1q09 results (vs 4q08):
1. Total revenue up 8.9% to $101.2B
- # of subscribers up 4.4% to 477.2M vs 4q08, but the growth slow down to 19.9M in 1q09;
- min/ppl/mth down 2.8% to 478 vs 4q08 and total min up only 0.7% to 661.4B;
- ARPU down 12% to $73 vs 4q08, significantly lower than expect. Mainly due to economy slow down in urban city plus continue increase in low end users;
- EBITDA margin keep at 52.7%, slightly better than 4q08
- EBITDA down 6.8% from 4q08;
- Net margin down by 9.1% to 24.9%, mainly due to ARPU down;
3. Balance Sheet
- N/A
- Face increase competition in environment;
- Unsymmetrical act against CHL's monopoly position in wireless industry;
- CHL's 3G wireless standard TD-SCDMA is not a mature as China Telecom's CDMA & China Unicom's WCDMA;
- Rise on Capital expenditure on 3G;
- ARPU may further reduce since most of the new subscriber are lower income users from rural market
- Slow down in general economic growth
1q09 results lower than expect I think it is mainly due to global economy slow down as well as the new subscribers growth slow down (on higher peneration rate & higher competition in China's telecom industry). 2q09 ARPU should rise back to $74-75 range.
Buy, but will lower the Fair Value to HK$125.71 (down from $144.62 as of 03/19/09)
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