Why I think China Mobile is a buy: I
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First a bit background.
Re-org of China telecom industry
All the big players: China Mobile 中国移动 (CHL), China Netcom (CN), China Telecom 中国电信(CHA) and China Unicom 中国联通 (CHU), are majority owned by the state. In the widely anticipated re-org plan, the goverment will try to create more competition in wireless arena (right now CHL is much bigger than CHU); and save the fixed line operators, as CHA and Netcom are losing landline subscription to mobile phones. China Unicom, currently the smaller rival of China Mobile, will sell its CDMA network to China Telecom, and meanwhile CHU (with its GSM network) will merge with China Netcom.
This means China Mobile will have a new competitor, China Telecom (which ironically, is its former parent); and a more focused/strengthed older riva (Unicom)l. But the math is not the deciding factor here.
First, it may not easy to divide up the two networks of China Unicom. More importantly, as we know: a frog is still a frog after you kiss it. China Unicom will still be the underdog after the split. As to China Telecom, it will take time for them to move from fixed line to mobile world (no offense to the hard working people at CHU and CHA).
Meanwhile, China Mobile is signing up new subscribers (2.5G) from rurual areas, and offering data service or second line to users in cities. As shown in this Chinese news (source: 21cbh), and the company’s English web site.
Interestingly, the CEO of China Mobile, Wang Jianzhou, went to Zhejiang Univ. management dept., where one of my brothers went. Note I am not saying Zhejiang Univ. is better than the US college I went (connecting to Yesterday Sprint fiasco story), I am saying it’s important for CEO to study and know managent.
I will talk about the huge hype around 3G and deployment delay (related to reorg) in China later on.