Red Herring gushes over China Mobile (CHL)

Why not? The company is China's dominant wireless carrier, is growing rapidly, and looks to capitalize from the much-rumored breakup of China Unicom (ticker: CHU). Here are the key points:

• China Mobile has more subscribers than the biggest fixed-line operator, China Telecom (ticker: CHA), from which it was spun off by state mandate in April 2000
• Its subscriber base of 201 million users as of November 2004 gives it a 60.9% market share in China. Over 3 million new subscribers sign up every month
• At year’s end, China Mobile had around 30 million WAP users
• In 2004, over 140 billion SMS messages were sent over its network
• Data service revenue has climbed steadily since its launch
• In addition to voice and data, China Mobile also operates a
  lucrative voice-over-IP (VoIP) service, selling popular IP calling
  cards
• The operator’s soft switch network is the world’s largest

On management's business abilities:

• China Mobile has proven savvier than many Western operators when it comes to services, billing, customer segmentation, and marketing campaigns
• It operates its GSM/GPRS network in all of China’s provinces and cities, offering near-blanket coverage
• It has tried to match its geographic coverage with targeted demographic coverage as well, with three brands aimed at different segments: high-value customers (GoTone), the young and hip crowd (M-Zone), and budget-conscious, low-end users (Shenzhouxing, a prepaid service)
• It has already introduced the type of perks that Virgin famously offers to its airline and other customers
• Inspired by the wild success of NTT DoCoMo’s i-Mode mobile data platform in Japan, CHL launched a similar billing platform of its own, which it called Monternet, in 2001. Overnight, the company created an entire industry of literally thousands of value-added service providers slinging games, ring tones, screen graphics, and horoscopes to China's youth
• China Mobile takes upwards of 15% from every wireless value added transaction
• The carrier has extended this same approach to 2.5G services, offering third-party MMS and WAP content and applications to GPRS users

On the future of competitor China Unicom (ticker: CHU):

• With a market shake-up looming, it is unclear what role China Unicom will play going forward
• It has a market share of 39.1%, and is the only one of the four big Chinese carriers licensed to offer the whole gamut of telecom services: cellular, fixed-line, Internet, and VoIP
• It maintains two separate mobile networks, GSM and CDMA. While this has been one of Unicom’s chief selling points in years past, it’s now shaping up to be a primary liability
• It has been focused on growing its CDMA business, subsidizing CDMA handsets to try and enlist subscribers
• It has repeatedly failed to hit its subscriber targets, and new subscribers are down to 650,000 per month

The entire article can be found here.