China Mobile: Industry Dominance Expected to Continue

China Mobile (CHL), the world’s largest carrier in terms of users, beat the Street with its 2007 earnings result last week after a surprisingly good fourth quarter. Net profit rose 32%, revenues rose 21% and the company added 68 million subscribers last year. Total minutes of usage increased a whopping 45%.

The company expects strong subscriber growth and healthy margins to continue in 2008, Citigroup analyst Michael Meng said in a note to clients. China Mobile plans to increase it capital expenditure by 21% on expansion, new products and infrastructure to make way for future growth, he added.

As for its role in the Beijing Olympic games this summer, network deployment for TD-SCDMA – the Chinese home-grown 3G standard – had been completed in eight provinces at the end of 2007, and is currently in the network optimization stage, Mr. Meng said.

He added:

Management expects TD trail launch at April 08, and provides commercial service during Beijing Olympic Games in the summer. We believe CM will dominate the fast-growing China market even after restructuring.

The analyst lowered his price target from HK$160 to HK$150, while maintaining a “buy” recommendation on the shares.