China Mobile Eyes Long-Term Growth, But It Comes With A Cost

This article was first published by Seeking Alpha on September 1, 2014

By Sarfaraz A. Khan. Research Asst. Sumaiya Amin

 

Summary: China Mobile has recently reported its half-yearly results. The company’s revenues climbed but income dropped on higher costs. China Mobile’s profits could continue to remain under pressure this year. It’s long term outlook, however, is what investors should focus on.

China Mobile (NYSE:CHL), the biggest player in China's enormous telecom market, with the largest subscriber base in the world, could continue to struggle with profits this year. But the company is eyeing a brighter future in the long term.

The recent earnings release has shown a drop in profits, but the company is growing where it matters most, data services.

Earlier this month China Mobile released its half-yearly results in which operating revenues increased by 7.1% in H1-2014 from a year ago to $52.8 billion, driven by a 4.7% increase in revenues from telecommunication services, to $48.5 billion. The improvement was due to a 27.81% increase in data services revenues which offset the 53% drop in voice services revenues. The data services unit was buoyed by 52% higher wireless data traffic revenues, which now represent a little less than a quarter of China Mobile's core telecommunication services.

Clearly, the relatively newer data services business has been driving China Mobile's growth. On the flip side, with a shift toward wireless data traffic, the company's traditional business has come under pressure. During the first half of this year, the voice service revenues dropped by read full article at Seeking Alpha. 

China Mobile Will Be the Biggest Beneficiary of the Changing Market Dynamics

By Sarfaraz A. Khan and Gohar Yousuf

Last week, Wall Street Journal, citing an unknown source, revealed that Apple (AAPL) has finally signed its landmark deal with the world’s biggest telco China Mobile (CHL) which would give Apple access to hundreds of millions of additional customers. Neither Apple, nor China Mobile has officially confirmed the deal. This comes after China’s Ministry of Industry and Information Technology gave permission to China Mobile, China Unicom (CHU) and China Telecom (CHA) to operate LTE/fourth generation digital mobile telecommunications (TD-LTE) business. 

With these developments, China Mobile looks all set to launch its commercial 4G services in China on December 18 under the brand name “He”. However, rumors abound that China Mobile will officially launch the two new iPhones on this date.The market dynamics of the country's telecommunication industry are quickly changing and it appears that China Mobile, whose recent quarterly results failed to meet market's expectations, could emerge as the biggest beneficiary of this change .... read full article at GuruFocus