China Mobile: Stabilized 3G And Ready To Dominate 4G-LTE Market In China

| About: China Mobile (CHL)

China Mobile (NYSE:CHL), currently has over 722 million subscribers and is accelerating its deployment of 4G TD-LTE in China. By working with Alcatel-Lucent (ALU), lightRadio Metro Radio will bring high-performance 4G services to Shanghai, Nanjing and Qingdao, three of the fastest growing cities in China. Alcatel-Lucent's lightRadio portfolio of products will achieve the reduction of costs and power-consumption, as well as the size of LTE network elements, thus helping China Mobile to meet the growing demand for mobile video and data with increased speeds and performance.

Higher Network Capacity Achieved by Small Cells

While it was traditionally too difficult or too costly to deploy a macro cell base station in busy indoor and outdoor locations, lightRadio Metro Radio now provides a cost-effective alternative. This will alleviate the capacity problem for cellular networks as more subscribers use mobile devices to access high-bandwidth services. Small cells will enable China Mobile to provide high-quality, consistent services to customers without the need to build costly and logistically challenging cell towers.

TD-LTE HD Video Calls Enabled by Acme Packet's SMX Solution

At the 2013 Mobile World Congress, Acme Packet (NASDAQ:APKT) announced that it will work with China Mobile to demonstrate TD-LTE applications, including HD video, using Acme Packet's Net-Net SIP Multimedia-Xpress (SMX) Solution. SMX Solution enables service providers to quickly implement next-generation services, such as voice over LTE (VoLTE) and Rich Communications Services (NYSE:RCS). According to the announcement, SMX offers the following benefits:

"Rapid time to market though minimal systems for deployment and provisioning; Lower capital expenditure and operational costs by combining the session core and edge into one element; Cloud-like scalability from thousands to millions of users by simply adding more systems."

VoLTE Call Made between TD-LTE and LTE FDD

At the 2013 Mobile World Congress, Ericsson and China Mobile had successfully demonstrated a dual mode HD voice over LTE (VoLTE) call between TD-LTE and LTE FDD based on ST-Ericsson's multimode modem and Renesas Mobile' quad-mode chipsets. According to the news release, "VoLTE has been deployed into commercial service with several operators, and the demand for TD-LTE voice services is also growing. As of January 2013, operators in 45 countries have launched HD voice over WCDMA/GSM/LTE in 61 live networks, supported by mainstream devices." HD voice over TD-LTE will ensure superior user experience and thus will benefit China Mobile's TD-LTE subscribers when it becomes available. Ericsson already assisted China Mobile Hong Kong in demonstrating a live, seamless, bi-directional LTE TDD/FDD interworking on the converged LTE TDD/FDD network in December, 2012.

Expanding 4G Ahead of Its Domestic Rivals

China Mobile claimed that its 4G technology will make its first widespread deployment this year, with a total of 1 million subscribers. According to IHS, China Mobile will have a near insurmountable lead with 55.1 million 4G subscribers, which will be 34.2 million more than China Unicom (NYSE:CHU), its closest competitor. So far, China Mobile had spent an estimated $1.5B to build its two trial networks and deploy all those base stations. By the end of 2013, China Mobile will have deployed a total of TD-LTE 200,000 base stations. By 2017, a total of 600,000 TD-LTE base stations will be deployed by China Mobile, compared to 400,000 for China Telecom and 300,000 for China Unicom, IHS iSuppli predicts.

Stabilized 3G Market Share, Working Aggressively for 4G

After years of stagnation for China Mobile's 3G market share, the latest data show that China Mobile had stabilized at 38% of the 3G market share at the end of January, while China Unicom had 32% and China Telecom had 29%. China Mobile is ready to market its 4G service aggressively, as compared to its previous 3G promotion. China Mobile's 4G network is still in the trial stages but could instantly become a commercial service when the telecoms regulator awards 4G licenses. China Mobile is working aggressively to make sure there will be sufficient smartphones to use its 4G network, which could include a long-waited deal to offer Apple's (NASDAQ:AAPL) iPhones for its 4G network. Qualcomm's (NASDAQ:QCOM) new Long Term Evolution chipset, the RF360 Front End Solution, will also enable a truly global 4G LTE design for mobile devices, as well as making it possible for iPhones to work on China Mobile's network.

Bottom Line

With stabilized 3G market share, China Mobile's bottom line is improved. China Mobile is determined to push forward its 4G-LTE market. Based on its recent positive development, China Mobile is ready to leap forward as soon as 4G license is issued. With improved network capacity, HD video offering, VoLTE dual mode, and fast base expansion, China Mobile looks promising. Investors can also review the following ETFs to gain exposure to CHL, including BRIC ETF (NYSEARCA:EEB), Golden Dragon Halter USX China Portfolio (NASDAQ:PGJ), ISE Chindia Index Fund (NYSEARCA:FNI), BLDRS Emerging Markets 50 ADR Index Fund (NASDAQ:ADRE), and BLDRS Asia 50 ADR Index Fund (NASDAQ:ADRA).

Note: Investors and traders are recommended to do their own due diligence and research before making any trading/investing decisions.

Disclosure: I am long CHL. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: May initiate a long position in QCOM

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