China wireless operator, China Mobile (ticker: CHL), announced Q1 2005 results last week. Here is one analyst's reaction to what seemed to be investor indifference to relatively strong quarterly results:
Why were Investors Unimpressed?
- While China Mobile reported strong operating results, there are concerns of slowing subscriber growth.
- China Mobile's new growth is coming more from rural areas. BUT, investors are concerned that consumers in rural areas tend to spend less than in larger cities.
China Mobile's Dominance:
- China Mobile is the dominant of two China wireless operators.
- To provide content to mobile subscribers, you must work with China
- To advertise to Chinese mobile phone users, you must work with China Mobile.
Becoming more Powerful:
- In many countries with market-based economies, monopolies tend to lose power over time as competitors and governments exert pressure.
- In China, however, the government continues to allow China Mobile to play tough with wireless providers.
- Sohu (ticker: SOHU), Sina (ticker: SINA) and Linktone (ticker: LTON) are some of the companies that have recently been penalized by China Mobile.
....This harsh treatment of wireless providers shows no signs ofSee the rest of the piece from ChinaTechNews here.
ending. When you talk to executives at companies doing business with
China Mobile these days, there is uniform resignation at the inevitable
uphill battles with the monopoly. One indicator (I have mentioned this
in previous articles): China Mobile takes an extremely inattentive
attitude to its payments on accounts payable. The lesson: if China
Mobile owes you money, don't hold your breath.