- Goldman Sachs has changed its mind on China's state-owned telecoms, and made a switch.
- In favor now is China Unicom (CHU +0.1%), added to the firm's Conviction Buy list from a previous Neutral stance, while China Mobile (CHL -1%) gets a downgrade to Neutral.
- China Mobile declined 0.9% in Hong Kong today, while China Unicom picked up 4.3%.
- China Mobile, the country's 4G market leader, is having the better year -- up 10.2% YTD in U.S. trading, vs. China Unicom's gain of 1.4% -- so analyst Donald Lu sees Unicom as "glass half full" and China Mobile as "half empty."
- Rapid data growth is tailing off at China Mobile (170% to 104% from Q1 to Q2) and is heading to 72% in 2017, Lu says, while Unicom has 4G penetration of just 30% (vs. China Mobile's 54% and China Telecom's (CHA -0.1%) 46%).
- China Unicom also has the biggest exposure to China Tower, which Goldman estimates is worth $47B and is headed for an IPO next year. That firm owns 98% of China's telecom towers.